The Hindu Business Line : Steelmakers, miners clash resurfaces

New Delhi, March 31 The clash of interest between the steel and the mining industry has resurfaced again following a recent Government move to control steel prices as part of inflation management.

To bring down steel prices the Indian Steel Alliance (ISA), representing steel manufacturing companies, has sought complete exemption of excise duty on steel products which is at 14 per cent. It also feels that the rising prices of domestically available iron ore is one of the main factors contributing towards rising cost of steel.

ISA has urged the Government for complete exemption of import duty on key raw materials like coking coal, zinc, natural gas and lime stone

And in order to make the duty exemption revenue neutral, the ISA suggested imposition of 25-30 per cent ad valorem duty on iron ore exports. Iron ore exporters currently pay Rs 50 per tonne as export duty for ore containing up to 62 per cent iron content, while for ores containing more than 62 per cent iron the duty is pegged at Rs 300 per tonne.

The country exports around 90 million tonnes of iron ore fines.

According to steel manufacturers, since iron ore is a non-renewable finite natural resource, it should be preserved for the future in view of national interest because all the steel companies are currently increasing their capacities.

However, the mining industry feels that the argument forwarded by steel makers is fundamentally flawed because Indian companies use calibrated iron ore (CIO) for making steel and not iron ore fines, which is the product that is being exported. The Federation of Indian Mining Industries (FIMI), representing the mining industry, further feels that if export is stopped, the fines will pile up at the mines that will lead to shortage of CIO production and also will affect India’s image globally.

The Secretary General of FIMI, Mr R K Sharma, told Business Line that “If export duty is increased further, Indian iron ore will become uncompetitive and will slow down exports. India will also be branded as an undependable supplier of iron ore.”

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