The Hindu Business Line : ‘Miners blending high grade ore with low grade’

New Delhi, Feb. 18 There has been a perceptible increase in the exports of low grade iron ore by almost 33 per cent during April-November period last year, according to Government data.

The mining industry has, however, in the past said that there is no export market for the low grade iron ore, that is, ore containing less than 62 per cent of iron (Fe) content.

Steel Ministry sources pointed out that during April to November 2007, while the total exports of iron ore were at 53 million tonnes (mt), about 32.97 mt were iron ore with less than 62 per cent Fe content.

The ore with Fe content between 62 and 64 per cent was at 12.63 mt and above 64 per cent was at 2.82 mt.

“This shows that the high grade iron ore is blended with the lower grade ore due to the differential duty structure. This is the reason why the Steel Ministry has written to the Finance Ministry to consider shifting from the present fixed export duty on ore to an ad valorem system with a 10-15 per cent duty on free on board (FOB) value,” an official said.

He added that if the change is made in this year’s Budget, Government’s revenues from the duty would increase from the present Rs 2,100 crore to around Rs 14,350 crore. As per estimates, the total iron ore export is likely to touch 105 mt by the end of the fiscal, out of which 70 mt will be high grade ore and the rest low grade.

“For instance in China, the export duty on coke was increased gradually and is now at 25 per cent compared to a rebate of 15 per cent there were giving in December 2003. This was done in order to protect the commodity and we are also pushing for a similar case in India on iron ore as our steel capacities and demand is increasing,” the official said.

The Government in 2001 imposed a ban on iron ore with 64 per cent and above Fe content by private miners and made it mandatory that any export of ore with Fe content of 64 per cent and above should be canalised only through MMTC.

“It was after this that a new grade evolved – ore with 63.5 per cent Fe content. This year when the Finance Minister imposed an export duty of Rs 300 per tonne on ore which contains above 63 per cent Fe and Rs 50 per tonne on below 63 per cent grade, a new grade evolved with 62.5 per cent Fe content.

And according to the miners, the 62.5 per cent grade never had any demand overseas before but the data indicates a different scenario,” the official said.

According to Mr R.K. Sharma, Secretary-General, Federation of India Mineral Industries, blending happens in the country only based on the market demand. “The blending happens to make the exports more reasonable and it happens in the ore which contains less than 62 per cent Fe content,” he added.

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