Commerce Ministry To Oppose Iron Ore Export Ban.

NEW DELHI: Anticipating a demand for a ban on iron ore exports, the commerce department has said it will oppose any such suggestion that could sharply drive down domestic prices and pare export earnings.

The Supreme Court, which last week banned mining in Bellary, had directed the environment ministry to find out the iron ore requirement of the domestic industry and the current levels of exports from the steel and commerce ministries.

"We will point out in our inputs to the environment ministry that a complete ban would suppress domestic prices of iron ore," a commerce department official told ET.

India, the third largest exporter of iron ore after Australia and Brazil, produces about 220 million tonnes of the mineral every year and consumes around 100 million tonnes.

While the domestic steel industry says a ban will ease the availability of ore, the commerce ministry is against it, arguing that iron ore shipments account for over 3% of India's exports. In 2009-10, the country exported iron ore worth $6 billion.

"Whatever view the environment ministry takes, it is going to apply to all states and not just Karnataka. So, a decision on the issue needs to be weighed carefully," the official said.

The Federation of Indian Mineral Industries has endorsed the concern raised by the commerce ministry, saying a ban on exports would result in price suppression. "Iron ore prices have fallen by 20% (to Rs 2,200 a tonne) after a ban on imports was imposed from the mining areas of Bellary last July," said federation vice-president H Noor Ahmed, who is also a managing partner in Bellary-based Trident Minerals.

The SC had suspended mining operations in nearly 10,000 hectares after a report by the state Lokayukta revealed extensive damage to the environment because of "overexploitation'' due to illegal mining. B S Yeddyurappa had to resign as Karnataka chief minister after the report indicted him of causing losses of Rs 1,827 crore by not cracking down on illegal mining.

"It is important, no doubt, to stop illegal mining and protect the environment, but a balanced view should be taken on the issue keeping in mind the interests of all sections," the official said.

The steel industry has been demanding a ban on iron ore exports, saying the country needs to preserve it for domestic use, an argument that is rebutted strongly by the commerce ministry.

India mainly exports iron ore fines, which are not used by the domestic steel industry due to limited sintering and pelletisation capacity, minister of state for commerce Jyotiraditya Scindia had said in a reply to a Parliament question. During 2008-09, fines constituted about 87% of total iron ore exports. "There is a need to export excess ore (mainly fines) as it cannot be stored and would cause environmental degradation and hazards in mining areas, if not evacuated and exported," he said.

The finance ministry quadrupled export duty on iron ore fines to 20% from April 1 to discourage exports and illegal mining.

Source : economictimes.indiatimes.com