|
| Iron ore export duty raised to 30% |
| Dilip Kumar Jha / Mumbai Jan 03, 2012, 00:16 IST |
|
Increase in duty upsets mining firms, but steel companies set to benefit after complaining about lack of supply for months.
In a major setback to the mining industry, the ministry of commerce has raised the export duty on iron ore to 30 per cent from the existing 20 per cent, effective December 30.
"It will be the end of exports of iron ore fines (a certain product size) from India. With an already high 20 per cent duty, export had declined 28 per cent in the first eight months of the current financial year," said R K Sharma, secretary general, Federation of Indian Mineral Industries.
However, this move to discourage export would help the domestic steel industry, which was finding difficult to get the ore it required due to the mining ban in Karnatka’s Bellary district. The share price of JSW Steel, one of largest iron ore consumers and finding difficulty in getting ore, closed with a gain of 5.9 per cent at Rs 537.
The move was seen as dampener for mining companies. Sesa Goa closed lower by 3.7 per cent to Rs 156.65 and NMDC fell 3.3 per cent to Rs 155.55.
India exported around 40 million tonnes of iron ore in April-November. Another five-seven mt could find its way out. Still, overall export would decline 50 per cent this year from the 97 mt of last year. Total iron ore production was 281 mt in 2010-11 against the demand of 103 mt. Despite 97 mt of export, the year ended with 80 mt of surplus ore supply.
The proportion of lumps in iron ore produced has come down from 43 per cent in 1995-96 to 39 per cent in 2010-11, whereas the proportion of fines has increased from 47 to 61 per cent (including concentrates) in the same period. That is, deeper mining means higher generation of fines. It is 70-75 per cent in India. Unless fines are evacuated from the mines, the production of lumps cannot be maintained or increased to feed the domestic steel industry, contended Sharma. The reduction/stoppage of export of fines by increasing the export duty would, therefore, also affect the availability of lumps to the domestic market, hitting the domestic steel industry, he said.
Pukhraj Sethiya, senior consultant at PricewaterhouseCoopers, did not entirely agree. “The increase in export duty is expected to boost supply of iron ore to the domestic steel industry, (perhaps) at lower prices,” he said. The price of fines declined 30-40 per cent in September-November.
Haresh Melwani, CEO of H L Nathurmal & Co, a Goa-based iron ore miner and exporters, feels the rise in export duty would increase under-invoicing of shipments. Since low grade iron ore is not exported from any other destination, Indian exporters to China will try to hide the actual price to remain competitive in Chinese markets, he added.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
