Commodities

‘Govt should crack down on illegal pellet exports’

Suresh P Iyengar Mumbai | Updated on November 23, 2020

The Federation of Indian Mineral Industries (FIMI) has alleged that the illegal export of 9 million tonnes of pellets by private producers is the reason for shortage of iron ore in the first half of this fiscal.

The illegal exports of pellet has also turned out to be a revenue loss for the exchequer. Unlike export duty of 30 per cent on iron ore, pellets were exported duty free.

The government had banned pellet export by private producers and allowed only State-owned KIOCL and its subsidiaries to export pellet duty-free after meeting the domestic supply. KIOCL had exported 1.99 mt last fiscal against 1.52 mt shipped out in FY19.

RK Sharma, Secretary General, FIMI, said that a major quantity of 9 million tonnes of pellets were exported illegally by private manufacturers. “Had this pellet exports by private entities been stopped, the iron ore requirements of steel industry would have been met completely,” he said in a letter to the Dharmendra Pradhan, Minister of Steel.

Of the 19 million tonne of iron ore exported in the first half this fiscal, about 16 mt had iron ore content of 58 per cent and the rest was of 62 per cent grade, which are not preferred by domestic steel producers. Moreover, a major quantity of iron ore export was from the inventory lying unsold at the pit-head, he said.

Cost advantage

The primary steel producers are projecting an artificial iron ore shortage despite each steel company having a captive source to meet their requirement. In fact, the primary steel producers with their own iron ore mine are at cost advantage besides assured supply, said Sharma.

Sharma said steel companies have increased prices three times between July and October while it has been raised by another ₹2,000-2,500 a tonne this month, hitting the secondary and downstream industry severely.

The government should immediately introduce a steel price monitoring system and regulation for sale by integrated steel producers besides implementing complete ban on pellet export by private players, he said.

Published on November 23, 2020

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