FIMI writes to Rajan seeking roll-back of export duty on ore
New Delhi: Alleging export duty on iron ore was imposed "under pressure from steel lobby and its cartel", miners' body FIMI has sought immediate recall of the 30 percent levy on the key steel-making input.
In a letter to Raghuram G Rajan, Chief Economic Advisor to the Ministry of Finance, FIMI said higher export duty coupled with exorbitant freight charges have led to a steep fall in exports of ore which has drastically come down from 117.37 million tonnes (MT) in 2009-10 to 61.74 MT in 2011-12.
Federation of Indian Mineral Industries said situation has worsened to such an extent that in first eight months of current fiscal exports have come down to 15.05 MT as against 40 MT in corresponding period of 2011-12, a fall of over 62 percent.
FIMI said, export duty on iron ore was imposed "under pressure of steel lobby and its cartel as well as Ministry of Steel".
Quoting an international expert, FIMI Secretary General R K Sharma in the letter said, "the exit of the world's third largest iron ore exporter (India) has been perfectly timed for miners in other countries seeking alternatives for their growing supplies as appetite from top buyer China slows."
About 100 MT of lost exports at the current average price of around USD 100 per tonne and another potential 30 MT of imports of higher quality of ore at around USD 140 per tonne will cost India USD 15 billion, money that goes straight into the pockets of foreign miners, Sharma said.
"The total requirements of fines, other than SAIL and TISCO (from their captive mines), do not exceed 38 MT due to limitation of technology. Pelletisation technology is slowly taking shape in India but it will take 4-5 years to make any significant contribution," Sharma said stressing that "the only alternative is to export."
Saying that at a time, when there is a demand-supply balance in the global iron ore trade, Government of India has deprived the iron ore industry of its legitimate earnings by making iron ore uncompetitive in the world market, he said.
The export duty on iron ore was raised to 30 percent in December 2011. Earlier, the government raised the duty from 5 percent on fines and 15 percent on lumps in December, 2009 to a uniform 20 percent in March 2011.