Iron ore exports deaf to FM tune

NEW DELHI: Finance minister P Chidambaram’s Budget proposal of levying an export duty on iron ore has failed to achieve its intended objective of checking exports. Iron ore exports are expected to rise by nearly 35% in March, compared to the exports in the previous month.

According to official data (Indian Port Association and state maritime board), 6.3 million tonnes of iron ore has been exported from eight major and three minor ports of the country up to March 15 this year.

With this growth, total exports of iron ore are expected to be about 12.6 million tonnes in March, compared to 9.7 million tonnes of exports in February, president of Indian Steel Alliance (ISA) Moosa Raza told reporters here. The Budget had proposed an export duty of Rs 300 per tonne on all types of iron ore to check exports and encourage value addition. “While the levy is a symbolic gesture, it may be noted that the standalone mining companies would increase their profits as iron ore prices will increase by Rs 450 per tonne in fiscal 2007-08,” Raza said while addressing a steel industry meet.

The mining industry, however, has a different explanation for the spurt in exports. “Since March is the last month of the financial year, every year during this month there is maximum nomination of vessels and higher exports. But the export duty has already impacted the eastern sector, where transportation of ore by road has come to a standstill,” secretary general of Federation of Indian Mineral Industries (FIMI) RK Sharma told ET. Meanwhile, major associations of the steel industry, including industry body Assocham, submitted a memorandum to UPA chairperson Sonia Gandhi on Monday seeking a freeze (quantitative restriction) on iron ore exports at the current level of about 90 million tonnes.

Besides the freeze, the memorandum has sought a complete phase-out of ore exports by 2011 by reducing exports by 15% per annum beginning 2007-08. The steel industry has promised that the entire quantity of ore diverted to the domestic market would be absorbed by the local steel producers and job losses, if any, would also be absorbed. Besides, the industry is also ready to negotiate iron ore prices with mining companies.