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Friday, January 6, 2012

Goa miner want exclusion from export tax

Friday, 06 Jan 2012

Times of India reported that miner as well as the Goa Chamber of Commerce and Industry have taken strong objection to the iron ore export duty hike to 30% from 20% effective from December 30.

As per report, both Goa Mineral Ore Exporter's Association Goa Chamber of Commerce and Industry have written to the finance ministry Mr Pranab Mukherjee to roll back the hike for low grade ore from Goa.

Mr Manguirish Pai Raikar president wrote that "Though the ministry has not given any rationale behind the hike, we believe it is prompted by the major domestic steel producers and is intended to make export of iron ore less competitive so that ore can be made available for encouraging domestic production of steel. A hike on ore with Fe content over 58% may be justified as such ore is used by the domestic steel and sponge iron industries.”

Mr Raikar in the letter, forwarded as a press note, elaborated that domestic steel manufacturers use iron ore lumps, while Goa produces low grade ore consisting mostly of fines. The latter ore, including fines, cannot be pelletised and hence are not suitable for steel making.

Mr Raikar added that "At the moment, only China has the technology to enable use of these materials which are unwanted in India; and until such time as the technology comes to India, this export should really be incentivized and not taxed.”

He held that if Goan ore is not exported and thus converted to foreign exchange after undergoing the process of generating employment and tax revenues, and is not consumed in India, it ceases to become a strategic natural resource and loses all economic relevance. Mr Raikar stated that "The low grade ore generated in the course of mining will then have to be treated as waste, raising environmental concerns in a tourist paradise.”

He further held that the low grade ore which competes for the Chinese market against ores from Australia, Madagscar, etc and is sold in the spot market may see clients opt for other players as Goa's pricing may be higher. This is especially since this is the second major export duty hike in this fiscal. Mr Raikar further stated that "This will make it difficult for us to negotiate long term sale arrangements so that mining investments, which are all long term in nature, cannot be planned properly.”

Mr Raikar concluded by pointing out that in the absence of any alternative use for low grade Goan ore, ore from Goa and Redi (southern Maharashtra) were treated separately in the export policy during earlier years and Goa should continue to be treated so.

Mr Glean Kalavampara secretary of GMOEA pointed out that no low grade ore is used by the domestic steel industry and even existing pig iron plants in Goa draw iron ore from Karnataka and elsewhere. He told TOI that "Logistically speaking, it is not practical or cost effective to transport ore from Goa to Orissa and other states where steel plants exist as there already exists surplus ore in those states.”

GMOEA too fears that Goa will lose out to Australia and Brazil who could easily increase their ore outputs and wipe Goa out.

(Sourced from TOI)

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