Mines Ministry may seek review of export duty structure on iron ore.

NEW DELHI: The Mines Ministry is likely to seek review of present export duty structure on iron ore, which stands at 30 per cent on all grades, to boost sagging exports of the key steel making raw material.

"There should be a review (of present export duty structure). Exports have come down significantly... domestic industry should not be in problem. We will speak to ministries of finance and commerce on this issue," Mines Minister Dinsha Patel told reporters here.

He was speaking on the sidelines of the annual general meeting of industry body FIMI.

Mines Secretary Vishwapati Trivedi said his ministry will soon present its case before the Finance Ministry on present duty structure, seeking a review as iron ore exports have come down significantly in the last fiscal.

"We are trying to find out the whether this is a time to give boost to the industry, even a temporary, by reducing the export duty (on iron ore)... We are positive that we should be able to make a case," he said, adding that his ministry may write to its Finance counterpart in next 10-15 days.

In last one year, Finance Ministry has raised export duty on iron ore exports twice -- first in March last year and then again on December 30, 2011, taking the total duty to 30 per cent on both types of iron ore -- lumps and fines.

The move, along with increase in railway freight rates and certain other factors like mining ban in Karnataka and restrictions imposed by the Odisha and Goa governments, has put a brake on growth of both, iron ore production and exports during the last fiscal.

While iron ore production was down by about 23 per cent to 169 million tonnes (MT) in 2011-12 from the previous years levels, exports have shrunk by over 38 per cent to about 60 MT in the last financial year, data collected by Federation of Indian Mineral Industries (FIMI) showed.

The iron ore exports may come down further to 40 MT levels in the current fiscal if export duty and freight rates are not reduced, FIMI's Senior Vice President H C Daga said.

Besides, sluggish demand from China -- the largest market of iron ore -- has also added to the woes of Indian iron ore exporters as international prices have crashed to USD 135-140 per tonne levels from last year's peak of USD 180 per tonne.

Seeking a revision in the present duty structure, FIMI had argued in past that about 92 per cent of the exportable iron ore is of lower grade (fines) and cannot be used by the domestic steel companies.

"For every one tonne of lumps (iron ore with more than 60 per cent Fe content) about 2.5 tonnes of fines is produced. There is not enough demand for fines in the domestic market and hence, have to be exported. Around 92 per cent of iron ore exports are fines and 8 per cent are lumps," it said.

Sourc : economictimes.indiatimes.com