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Goa Chamber of Commerce and Industry (GCCI) has requested the Centre to do away with the export duty on iron ore, considering the crisis being faced by the industry due to falling prices of ore in the international market.
The chamber, in its pre-Budget memorandum submitted to Union Finance Minister Arun Jaitley, said that complete withdrawal of export duty on the ore, irrespective of its ferrous content, would be a major step towards regaining confidence.
The Finance Ministry had raised the export duty on iron ore from 20 per cent to 30 per cent with effect from December 30, 2011.
Prices at 5-year low
After repeated requests, the export duty only on iron ore fines with grade below 58 per cent was reduced to 10 per cent with effect from June 1, 2015, whereas the rate remained 30 per cent for all other ores, including iron ore lumps with grade 58 per cent and above.
The economics of iron ore exports has changed completely with prices currently trading at five-year low.
“The benchmark grade (62 per cent) prices have declined from a high of $160 per tonne in 2011 to current prices of $34 per tonne on slowing Chinese iron ore demand and surplus iron ore production in Australia and Brazil. The prices for the lower grades have fared worst,” the GCCI said.
Deposits low grade
The deposits in Goa are predominantly low grade iron ores. With inland waterways in the state, such ores are best suited for export to overseas markets, which use the ore for blending with higher grade ores from other sources.
“The cost of inland transportation to domestic steel plants makes the use of such low grade ore (which also contains higher gangue material) domestically prohibitive, apart from the fact that it requires higher consumption of coking coal which India has to import,” it said.
Thus, with a lack of domestic demand, iron ores from Goa were in a position to find markets overseas.
It is, therefore, necessary that the plethora of taxes on the iron ore industry are rationalised, it said.
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