Mineral exporters have urged the government to abolish export duty to compete with other suppliers in global markets and make way for further excavation at minesites.
In a pre-budged submission to the Finance Minister Arun Jaitley, Kolkata based Indian Ore Exporters' Association, a body represented by hundreds of iron ore miners in eastern states including Odisha, argued that low grade iron ore mined automatically while mining high grade is not used by domestic steel mills. Therefore, its exports should be encouraged to vacate the minesites where the same is deposited. Read our full coverage on Union Budget
"The government levied 30% export duty to discourage exports of iron ore, to promote steel production in India and to conserve natural resources. To protect the interest of miners, the government rolled out incentives to build pellet plants to utilize the iron ore fines. Unfortunately, these pellets units also used high grade iron ore (lumps) leaving thereby, problems of fines unresolved. Keeping ore stocks for long period, spills over to adjoining areas and also into water bodies which needs to be prevented. The only way to prevent such spread is to encourage exports which will be possible only after abolishing duty immediately," said P K Chaki, Secretary, Iron Ore Exporters' Association.
Normally 65% of fines are generated to produce 35% of calibrated (desired size) ore. These low grade fines particularly of Fe content below 60% had very little or no commercial demand in India till 2003 and therefore, used as landfills. Suddenly, on Chinese steel boom between after that, Indian exporters found heavy demand for production of steel. So, out of 220 million tonnes of output in 2009, 125 million tonnes were exported of which 110 million tonnes to China alone.
According to informed sources, there is a massive stock of iron ore stored at the eastern coast of Odisha which awaits duty reduction for exports to China to compete with other global suppliers including Australia and Brazil.
R K Sharma, Secretary General of the apex industry body the Federation of Indian Mineral Industries (FIMI), said, "There is no need for export duty on minerals. Hence, it should be abolished immediately to encourage mining."
The government levied 5% export duty on pellets, 10% on bauxite and 30% on chromite and iron ore.