India May Impose 20% Duty on Iron Ore Export

In a bid to rein in iron ore exports, the steel ministry in India is trying to impose 20% duty on exports.

According to a report in India's leading Economic Times newspaper, the ministry has sought Prime Minister Manmohan Singh's intervention for imposition of 20 per cent export duty on iron ore shipments.

Steel minister Virbhadra Singh has written a letter to the prime minister seeking imposition of a minimum of 20 per cent ad valorem export duty on all grades and varieties of iron ore to curb its export.

At present, there is a 10 per cent export duty on iron ore lump and 5 per cent on iron ore fines. Earlier, the steel ministry had sought the duty structure to be doubled in the Union Budget 2010-11, but the demand was not met.

The ministry had also written a letter to the finance minister on March 12 requesting imposition of flat 20 per cent duty on iron ore exports.

Meanwhile, Steel Authority of India Ltd (SAIL) will form a joint venture company (JVC) with the Shipping Corporation of India (SCI) that will cater to the growing raw material import needs of the steel maker.

SAIL is keenly focused on ensuring its long-term raw material security and will continue to give thrust on logistics facilities and creation of infrastructure for smooth flow of raw materials and movement of finished products.

The two state-run companies entered into an agreement to set up the JVC in which both will have equal equity stake. The JVC will annually ship around one million tonnes of raw materials used by the steel company. The capacity will be expanded later.

The deal enables SAIL, India's largest steel producer in the public sector, to have control over part of its coking coal supply chain and effectively mitigate the risks existing in the volatile shipping market.

At present, SAIL annually imports around 10 million tonnes coking coal, a major input for steel making. The requirement of imported coking coal would increase with the company planning to double its hot metal production capacity in the coming years from the current level of around 14 million tonnes.