India Plans Proposal to Cut Iron Ore Export Tax .

NEW DELHI – India's mining ministry is working on a proposal to reduce export taxes on iron ore and railway freight to boost exports of the steelmaking material, Mines Secretary Vishwapati Trivedi said Tuesday.

Mr. Trivedi's comment comes a day after India's Supreme Court eased a ban on iron ore mining in the mineral-rich state of Karnataka. A combination of relaxed mining rules in Karnataka and reduced export taxes could herald a gradual recovery in India's outbound shipments, which slumped by more than a third to 61.8 million tons in the year ended March 31, 2012.

In addition to the mining ban in Karnataka, the slump was due to higher freight costs -- the result of state-run railways raising rates to reflect higher input costs -- as well as an export tax increase, to 30% from 20%, that went into effect on Dec. 30, 2011.

The increase has had a significant impact on export volumes, Mr. Trivedi said. He didn't say exactly when the changes might be implemented, but said "we will try as soon as possible."

The central government imposed the Karnataka ban last year to address rampant illegal mining that had caused environmental degradation.

Miners are cutting back on production as a result of reduced exports, as they can't sell iron-ore fines or inferior grades domestically because Indian steelmakers don't have the technology to use them.

"There's a case for export of [low-grade iron-ore] rather than dumping [it] and spoiling the environment," Mr. Trivedi said.

The draft of a new mining law aimed at attracting mining investments by simplifying rules and making land acquisitions less bumpy will likely be introduced in Parliament's winter session this year, after incorporating some of the suggestions from a parliamentary panel, whose report will likely be released soon, he said. The panel consulted stakeholders including residents of mining belts and state governments, he added.

Indians displaced by mining and related industries have staged protests that turned violent in recent years. They cite inadequate compensation, loss of livelihoods and potential ecological damage. South Korean steel major Posco, Luxemburg-based steelmaker ArcelorMittal MT -0.41% and London-based Vedanta Resources VED.LN -1.79% PLC have all been targeted by protestors.

Mr. Trivedi said that some of the local issues would need to be resolved by the companies themselves, but added the government had been proactively working to clear policy hurdles.

Once the new mining legislation is passed, the government will seek to boost mineral exploration, he said, adding that exploration of minerals buried deep below the surface in the country has been "highly neglected."

Source : online.wsj.com