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Private iron ore miners stop scouting for export orders

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`Rs 300 per tonne duty proposed in Budget to hit industry'

Adverse impact
China is the major buyer of Indian iron ore and the buyers there are not prepared to absorb the increased cost.

New Delhi March 11 Private iron ore miners have stopped scouting for export orders for the next fiscal beginning April 1 as the Rs 300 per tonne export duty proposed in the Budget has made Indian ore uncompetitive in the global market.

According to Mr Rahul Baldota, Vice-President of the Federation of Indian Mineral Industries (FIMI), "China is the major buyer of Indian iron ore. But following the imposition of fresh export duty, the Chinese buyers have said that they are not prepared to absorb the increased cost. In such a situation, export of iron ore fines is coming to a halt and would impact the domestic mining industry very adversely. At the moment, we are only executing committed orders and have stopped booking fresh consignments."

India, last year, produced around 155 million tonnes of iron ore (including both lumps and fines) out of which about 52 million tonnes were used by the domestic steel manufacturers. Of the remaining, around 89 million tonnes were exported and a balance of around 14 million tonnes is left over, Mr Baldota said.

Explaining the position of the iron ore mining industry, Mr Siddharth Rungta, also Vice-President of FIMI, said "Major domestic steel manufacturers such as SAIL and Tata Steel have their captive mines while other producers such as Ispat, Essar and JSW of the Jindals do not use iron ore fines. Consequently, 84 per cent of exports of this product are in the form of ore fines while iron ore lumps constitute just about 16 per cent. China has demand for iron ore fines because steel makers there go through the sintering route for making steel," he added.

Mr Rungta pointed out that in the domestic sector also it is the secondary steel makers who use fines for their production as the major producers either have captive mines or have long-term contracts with the public sector National Mineral Development Corporation for their requirements.

According to Mr Baldota, in the absence of Indian ore in the international market, the other two large suppliers, namely Australia and Brazil, would emerge as the gainers. "Both Australia and Brazil have been on a major expansion programme for their mines and with the increased capacities it would be an ideal opportunity for the rivals to capture India's share in the global market," he said.

The FIMI office-bearers emphasised that the official Hoda Committee looking into iron ore exports had suggested that an export duty be levied only on export of high grade iron ore lumps (65 per cent and above iron content) and not on any other grade form. But the Government had imposed the export duty on all categories of export, they added. The Hoda Committee was constituted in the wake of demands from domestic steel industry as well as some political parties that India should not encourage the export of its raw material and should instead focus on export of value- added steel products.

Loss of revenues

Moreover, the officials pointed out that the export duty, for all practical purposes, would eventually result in loss of revenues for the Government.

"Loss of even half of the 90 million tonnes of export would mean that the Railways would lose Rs 800 per tonne for 45 million tonnes that are moved through rails and another Rs 200 per tonne in the form of port charges," they said.

This would translate to around Rs 3,600-crore loss for the Railways and around Rs 900- crore loss for the Indian ports. Moreover, non-export of iron ore fines would result in their stockpiling at the mines and fresh production would be drastically reduced, they said.

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