Ore for exports will have to cater to domestic needs
The government has increased the ad valorem export duty on iron ore to 20 per cent — from five per cent for fines and 15 per cent for lumps. This has come as a major blow to the miners.
The government’s message, however, is loud and clear — value add or suffer. The move is seen as an attempt to force miners to sell more domestically rather than eye the international market.
Advisor, Federation of Indian Minerals and Industries (Fimi) S B S Chauhan said, “This is not good for exporters. Such a high duty cannot be absorbed by the sector and passing it on to the consumer is not an option since prices are a function of demand and supply in the international arena. Clearly, increasing the availability in the domestic market is the agenda and this will now happen.”
India exports close to 100 million tonnes of iron ore, majority of which makes it way to China. NMDC, India’s largest iron ore miner, exports 3 million tonnes to the Japanese and Korean steel mills and Sesa Goa, part of the Vedanta Group, is a major supplier to the Chinese market.
Senior vice-president at Edelweiss Capital Prasad Baji said the duty jump was too steep. “Ore pricing is related to the international market and India is a price-taker. In that sense, India really cannot decide on the price at which it would want to supply. Profitability will be hit if miners continue to export,” he said.
The move will complement steel production in India, which has grown over 6 per cent in 2010 while demand has grown at 9-10 per cent annually.
Chairman of Steel Authority of India (SAIL) C S Verma said, “Higher export duty on iron ore has been a long pending demand of the steel industry and the budget has taken care of the issue.”
Miners, who are investing in setting up pellet and sinter plants, have welcomed the withdrawal of export duty on the value-added iron ore, known as pellets. Chairman and Managing Director, NMDC, Rana Som said they were setting up two pellet plants with a combined capacity of 3.2 million tonne. “One million tonne will be used for internal use and the remaining is for commercial purpose,” he said.
“FIMI has been asking the government to remove the export duty on pellets. It is good for miners who are value adding and selling iron ore. Now, we will definitely see more investment in setting up of pellet plants,” said Chauhan. Iron ore, in its powdered form (fines), are fed into the pellet plant and converted into iron ore pellets and sold to steel makers. This product is then directly fed into the blast furnace to make steel, along with other raw materials like coking coal and limestone.
“China buys iron ore fines from India as the country has already invested in setting up of pellet and sinter plants. Therefore, they do not need much of pellets. However, there is some demand for iron ore pellets and this move will have a little positive impact for the companies looking to value add iron ore,” said Baji. (sourced:Business Standard)
Tags:iron ore miner, Indian iron ore exporters
The government’s message, however, is loud and clear — value add or suffer. The move is seen as an attempt to force miners to sell more domestically rather than eye the international market.
Advisor, Federation of Indian Minerals and Industries (Fimi) S B S Chauhan said, “This is not good for exporters. Such a high duty cannot be absorbed by the sector and passing it on to the consumer is not an option since prices are a function of demand and supply in the international arena. Clearly, increasing the availability in the domestic market is the agenda and this will now happen.”
India exports close to 100 million tonnes of iron ore, majority of which makes it way to China. NMDC, India’s largest iron ore miner, exports 3 million tonnes to the Japanese and Korean steel mills and Sesa Goa, part of the Vedanta Group, is a major supplier to the Chinese market.
Senior vice-president at Edelweiss Capital Prasad Baji said the duty jump was too steep. “Ore pricing is related to the international market and India is a price-taker. In that sense, India really cannot decide on the price at which it would want to supply. Profitability will be hit if miners continue to export,” he said.
The move will complement steel production in India, which has grown over 6 per cent in 2010 while demand has grown at 9-10 per cent annually.
Chairman of Steel Authority of India (SAIL) C S Verma said, “Higher export duty on iron ore has been a long pending demand of the steel industry and the budget has taken care of the issue.”
Miners, who are investing in setting up pellet and sinter plants, have welcomed the withdrawal of export duty on the value-added iron ore, known as pellets. Chairman and Managing Director, NMDC, Rana Som said they were setting up two pellet plants with a combined capacity of 3.2 million tonne. “One million tonne will be used for internal use and the remaining is for commercial purpose,” he said.
“FIMI has been asking the government to remove the export duty on pellets. It is good for miners who are value adding and selling iron ore. Now, we will definitely see more investment in setting up of pellet plants,” said Chauhan. Iron ore, in its powdered form (fines), are fed into the pellet plant and converted into iron ore pellets and sold to steel makers. This product is then directly fed into the blast furnace to make steel, along with other raw materials like coking coal and limestone.
“China buys iron ore fines from India as the country has already invested in setting up of pellet and sinter plants. Therefore, they do not need much of pellets. However, there is some demand for iron ore pellets and this move will have a little positive impact for the companies looking to value add iron ore,” said Baji. (sourced:Business Standard)
Tags:iron ore miner, Indian iron ore exporters
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