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Indian iron ore miners could bear 5% hike in export duty: MSPL |
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Indian iron ore exporters would still generate a net realizable value of 12-39% if export duties on the steelmaking raw material were increased by 5%, Suresh Kumar, vice president of shipping and project for MSPL, a producer with mines in Karnataka state, said at the 10th International Dry Bulk Review conference organized by IBC Asia in Singapore Monday.
Assuming FOB prices of $115/mt, a 10% increase in export duty would still mean a NRV of 6-33%, but could affect around 12 million mt of higher costexports, mainly out of Gangavaram and Vizag ports on the east coast, Kumar said. In a base case scenario of 0-10% in tax hikes, India would continue to export around 100 million mt of iron ore per year, he added.
Currently, prevailing export duties on Indian iron ore include a 5% tax on fines and a 15% tax on lump. The vast majority of iron ore shipped from India costs between $70-90/mt, including mining and logistics, Kumar showed in his presentation.
Under a scenario of a 20% increase in export duty, iron ore exports would still be profitable, with the exception of exports from Paradip, Gangavaram and Vizag, and NRV of less than 10% would occur for exports from Haldia,Krishnapatnam and Ennore, all on the east coast.
Other ports would still show healthy margins, however, including Karwar (21.25%), Belikeri (19%), Chennai (13.75%), Kakinada (11.5%) and New Mangalore (10.5%), and Goa's low-grade exports (24%), Kumar's presentation showed.
India exported 120 million mt of iron ore in 2009, of which 107.5 million mt went to China. During that year, Indian iron ore accounted for 17% of China's imports. About 90% of India's iron ore exports are fines.
As of March 31, 2009, MSPL's production capacity amounted to 3.6 million mt of iron ore, including 2.6 million mt of high-grade iron ore fines and 1 million mt of lump material. The company is part of Baldota Group, also India's largest wind power producer.
Source : platts.com
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