India May Slap 20% Export Duty on Iron Ore

Indian iron ore producers may face tougher time in the coming days with the government mulling to hike the export duty in the next budget.

According to reports, India's steel ministry has mooted a 20 per cent rise in duty on iron ore exports as part of its policy to discourage producers from exporting the commodity to China, the main buyer.

In a bid to prevent unabashed export of iron ore and to conserve iron ore for long-term value addition by the domestic steel industry, an export duty of 20 per cent may be levied on export of all varieties of iron ores.

The existing export duty on iron ore is 10 per cent after it was raised from 5 per cent and that of iron ore fines to 5 per cent from nil last month.

Besides curbing exports of iron ore, the proposal also seeks to conserve the mineral for the use of domestic steel industry and also restrict illegal mining of the natural resources, the official added.

The country exported about 106 million tonnes iron ore in the year-ago period, of which a major portion was shipped to China.

It seems in the coming days China will decide to fate of most of the iron ore producers in India. Twenty-two of the 43 listed steel plants on Shanghai and Shenzhen bourses have published their performance forecasts for 2009 by Friday, 18 of them expected profits and four expected a loss.

Growth of the profitable companies expected to hit as high as 200-300 per cent, while the loss-making companies to a hefty drop of 900-950 percent.

Only eight plants expected a profit growth from 2008, which are mainly small steelworks engaged in producing building steels or special steel products. For example, Xinjiang Ba Yi Steel (600581.SH) forecasted 0.57 percent year-on-year growth, and Sansteel Minguang (002110.SZ) predicted 10 percent to 30 percent growth.

The China Iron and Steel Association expected in its recent report that China's steel industry in 2010 would be better than in 2009.