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Steel industry welcomes export duty on iron ore
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Iron ore exporters cry foul
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Cold rolled steel sheets at the Tata Steel plant in Jamshedpur.
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Mumbai
Feb. 28
It appears that the steel industry has finally had its way on iron ore exports.
The Union Budget's proposal to impose an export duty of Rs 300 per tonne on export of iron ores and concentrates has cheered the steel industry, while iron ore exporters are crying foul.
Iron ore exporters say that the Rs 300-per-tonne export duty would no more make ore exports profitable both in the spot and the long-term contract markets, which may lead to many mines being closed.
Says Mr B. Muthuraman, Managing Director of Tata Steel: "Introduction of export duty on iron ore and chrome ore is a very welcome move and is directed towards conserving the scarce resources for the long-term benefit of the country. Restricting export volumes could also have been considered."
Echoing similar sentiments, Mr S.K. Roongta, SAIL Chairman, said: "Levy of export duty on iron ore and concentrates is timely. It will be appropriate if revenue so generated is utilised for developing infrastructure in and around mineral bearing areas."
Iron ore exports in the current fiscal are expected to touch 95 million tonnes out of the total production of about 160 million tonnes. India is estimated to have a reserve of 25,249 million tonnes, including magnetite grade of ore — this, however, does not include the 1,000 million tonnes of haematite iron ore recently discovered in Kabirdham district of Chhattisgarh. Industry analysts say that these reserves would last 100 years at 110 million tonne steel production level.
Mr R.K. Sharma, Secretary General of the Federation of Indian Mineral Industries, feels that the steel industry has no case in demanding a curb on iron ore exports, especially as most of the steel makers have captive mines. "Clamour for ban on exports despite captive mines is a pre-meditated move by the steel industry. For this would lead to a depression in domestic ore prices, as iron ore producers will be forced to sell the ore in the domestic market that will be controlled by the steel makers. Steel companies will now not touch their captive mines," he told Business Line.
He further pointed out that 84 per cent of the iron ore exported from India are fines, which have no market in India.
Last fiscal, the Indian steel industry, including secondary producers, consumed 52 million tonnes of ore, as against 48.1 million tonnes in 2004-05. Even after supplying this much ore to the industry and exporting about 90 million tonnes last fiscal, India still had a surplus of 12.6 million tonnes. "To say therefore that exports have been at the cost of domestic industry is far from truth," Mr Sharma pointed out.
A slowdown in iron ore exports in the wake of the export duty may also affect ports like Chennai, Haldia, Paradip and Visakhapatnam, which were developed as iron ore ports. Also, Railways move more than 45 million tonnes of iron ore for exports, earning revenue of over Rs 3,000 crore.
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