India Budget 2013: Mines Ministry Seeks 50% Cut in Export Duty on Iron Ore Fines

Ahead of the Budget, Mines Ministry has sought from the Finance Ministry reduction of export duty on low grade iron ore by 50 per cent to boost production to enhance export of the mineral.

"We have sought reduction in the duty on fines to 15 per cent from the Finance Ministry. Now they have to decide it. Presently there is a uniform duty of 30 per cent on both, iron ore lumps and fines," Mines Minister Dinsha Patel said here.

Shipment of fines constituted 92 per cent of total iron ore exports in 2011-12, data compiled by mining industry body, FIMI, showed. Total iron ore exports stood at 60 million tonnes during last fiscal as against 120 MT exports achieved in 2009-10.

Between April-November, 2012, total iron ore exports were at 15 MT, down over 62 per cent compared to the same period of previous year, the FIMI data says.

According to the industrial production (IIP) data, mining sector has shown a negative growth of 2.6 per cent in the first nine months of the current fiscal and has widened from the previous year's level of (-)1.9 per cent.

In December, 2012 itself, mining sector had a negative growth of 3.3 per cent. Iron ore, a key raw material for steel production, is one of the major components in the mining index of IIP data.

When asked about the demand of domestic steel industry for a complete ban on iron ore exports, Patel said, "Whatever is domestic demand should be made available, there should not be any shortage but lower grade iron ore, which cannot be utilised here, what do we do with them if we don't export."

"Whoever is saying that iron ore is not available (for the domestic steel industry) is not correct. I am not willing to accept it,", the Minister said.

He said that in 2010-11, Indian iron ore production was about 210 million tonnes (MT), whereas steel industry's total production was 65-70 MT. So their requirement was not more than 110 MT during that period, he added.

"Last year, even after excluding Karnataka, iron ore production was at 167 MT. By 2020, they (steel industry) are talking about 100 MT steel production capacity but even then, iron ore requirement will not be more than 160 MT as 1.6 MT iron ore is required for 1 MT steel production," Patel said.

The iron ore producers have been for long demanding reduction in export duty, which was hiked to 30 per cent last year for both lumps and fines varieties.

Iron ore fines are a co-product while producing calibrated lump ore and ratio of lumps to fines generation is around 30:70. This means for every tonne of production of lumps, about two tonnes of fines are produced.