Steel ministry proposes 15% export levy on iron ore

NEW DELHI: Steel ministry has proposed to the finance ministry to reimpose 15% export duty on iron ore (lumps and fines) in order to increase the availability of ore for domestic steel makers. Iron ore is a key input in steel making. In addition, the steel ministry has recommended levy of 15% duty on imports of hot rolled coils (HRCs), which is used mainly by construction and automobile sectors.

The finance ministry scrapped 15% duty on lumps by simultaneously lowering export duty on fines to 5% last year end with a view to tackle global economic slowdown. Iron prices have then crashed almost 50-60% as compared to July 2009 level.

As per the stand taken by the steel ministry, exports of iron ore should be discouraged and the ore should be conserved for the domestic steel industry, said a senior official in the steel ministry. For the fiscal year 2008-09, India���s iron ore exports registered a marginal 0.4% growth to 104.7 million over the previous year, backed by moderate revival in demand from Chinese steel producers.

As per the analysts, iron ore exports to China is expected to grow sharply this year as Indian ore would continue to enjoy cost competitiveness as against supplies of Australian and Brazilian mining companies. Around 80% of the country���s iron ore exports are alone to China, while the balance goes to Japan and Korea. India produces close to 200 million tonne of iron ore every year. Iron ore prices in the international market fell 40% to $50/tonne early last month from $85/tonne in February 2009.

The steel ministry is also pushing for higher duty on HRCs, which attracts 5% customs duty currently. The move is aimed at curbing low-priced steel coming from countries such as Japan, England, Ukraine, China and Kazakhstan into India.