FIMI wants roll back of export duty hike on iron ore

Tue,8 Mar, 2011, 02.52PM IST,PTI

NEW DELHI: Hitting out at the Finance Minister for increasing export duty on iron ore, the Federation of Indian Mineral Industries has written to Pranab Mukherjee requesting a roll back to the pre-Budget level.

"We would be grateful if you consider sympathetically rolling back the increase in export duty to pre-Budget 2011-12 level," FIMI Secretary General R K Sharma wrote in a letter to the Finance Minister.

The government has quadrupled export duty on fines to 20 per cent in the Budget for 2011-12. India had shipped over 100 million tonnes iron ore in 2009-10 and 70-80 per cent of that was in the form of fines. For lumps, the duty has been raised to 20 per cent from 15 per cent earlier.

"The hike in export duty will keep the domestic iron ore industry in a suspended animation in which illegal miners would reap benefits," Sharma said, adding that such increases keep iron ore industry on tenterhooks and do not allow it to generate surplus to invest in exploration.

Indian steel makers mostly use lumps and the requirement of fines does not exceed 30 million tonnes a year as two major firms, SAIL and Tata Steel , use fines produced from captive mines. The plants, which do not have own mines, procure fines from non-captive standalone mines, including NMDC.

"To supply lumps to the domestic industry, fines have to be evacuated from mines. Since domestic demand is inadequate, only outlet is export. In the absence of an attractive export market, a large portion of iron ore produced will be wasted," Sharma wrote.

Total iron ore demand by the Indian steel companies is about 102 million tonnes against the domestic production in 2009-10, including stock-pile at the mine-heads, of 299 million tonnes.

The Railways has also raised freight on iron ore meant for exports by Rs 100 a tonne to Rs 1,600 a tonne with effect from March 1.

"The increase in export duty and railway freight have affected the iron ore industry very adversely," Sharma wrote.