Hike in Duty to Hit Iron Ore Exports at Associated Press Ports

Iron ore exports from three ports — Visakhapatnam, Gangavaram and Kakinada — may drop 15-20 per cent during the next financial year due to the hike in export duty.

In the Budget 2011-12, the rate of export duty for lump and fine iron ore has been enhanced and unified at 20 per cent ad valorem, while iron ore pellets have been fully exempted.

The three ports currently export iron ore, most of which is fines. This now attracts only 5 per cent duty.

"The Railways has increased its freight rates by Rs 800 per tonne and if export duty increases to 20 per cent, our ore prices will not be attractive in the international market," Gangavaram port sources said. Gangavaram port exported 2.2 million tonne iron ore in 2009-10 and during the current year up to February, this stood at 2.5 million tonnes.

Vizag port, on the other hand, exported 12.67 million tonne iron ore fines in 2008-09 and 14.38 million tonne in 2009-10. In the current year up to end of February, ore exports touched 13.16 million tonne.

According to sources, iron ore exports at Kakinada port have already dropped drastically and may fall further in the next financial year. Kakinada port exported 2.5 million tonne iron ore in 2009-10, and in the current year it exported only one million tonne up to February. This was due to the problems in ore excavation in Bellary area.

Apart from this, the recent tsunami in Japan will also impact ore exports from Visakhapatnam port over the next two to three months. State-owned NMDC and MMTC Limited export 3-4 million tonne iron ore to Japan from Vizag port every year.