Roll back 30% duty on iron ore exports: FIMI

NEW DELHI: Mineral producers' body FIMI today demanded a roll back of the export duty of 30 per cent on iron ore exports, stating that about 92 per cent of the exportable ore is of lower grade and cannot be used by the domestic steel companies.

In a letter written to Finance Minister Pranab Mukherjee, Federation of Indian Mineral Industries (FIMI) said, "after meeting domestic demand and exports, there is excess supply of 82 million tonnes. Rather exports are under compulsion."

In last one year, the government has raised export duty on iron ore exports twice -- first in March last year and then again in January, 2012, taking the total duty to 30 per cent on both types of iron ore -- lumps and fines.

Stating that after the duty hikes the exports have become unviable and loss making proposition, the industry body said: "We request you to rollback export duty hike on all categories of irone ore - lumps and fines."

Seeking a meeting with the Finance Minister later this month on the issue with its office bearers, the industry body said that there is not enough demand for fines (lower grade iron ore) in the domestic market, which account for about 92 per cent of total exports.

"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.

FIMI added that as a fall out of increased duty, exports of the steel making raw material are likely to come down by about 50 per cent in the just concluded fiscal from FY'11 to 50-52 million tonnes (MT) and margins have turned negative for the industry.

Making a case for roll back of the duty, FIMI said that "there will be no revenue addition to Ministry of Finance" as exports are expected to be half of last year (2010-11).

It further said that production of the ore is lower due to mining ban in Karnataka, while domestic iron and steel industry has not generated newer demand of the raw material, thereby "state governments are getting less royalty".

Besides, iron ore reserves in the country has risen by 3,252 million tonnes between 2005-06 to 2009-10, while total mined ore stands at 997 MT in the given period, it said, adding that Indian mining industry is highest taxed in the world.

"It is clear that hike in export duty is counterproductive and created a loss-loss situation for all concerned," the industry body said.