India’s domestic steel lobby has objected to iron ore miners seeking a removal of export duty on 58-62 Fe grade ore and sought instead an increase in the duty. Pellet Manufactures Association of India (PMAI) in a letter to the prime minister’s office (PMO) on June 12 asked for export duty to be increased from current 30 per cent to 50 per cent.
Federation of Indian Mineral Industries (FIMI), the iron ore lobby group and PMAI’s rival, last week wrote to Finance Minister Nirmala Sitharaman seeking a removal of the steep 30 per cent export duty on ore above 58 Fe and less than 62 Fe. FIMI argued that the pellets had few takers in the domestic market.
FIMI said in its letter that the duty was responsible for a pile-up of 151 mt of stocks of iron ore fines at mine heads over the years, including at mines set to lapse in March 2020 that the government intends to auction.
“These stockpiles will prove to be a major impediment for commencing and carrying out scientific mining. Hence there is a likelihood of getting no or lukewarm response from prospective bidders to bid for such mine,” said the letter.
Countering this claim, the PMAI shot off a letter on June 12 to the PMO. As the world’s second largest steel producer that produced 109 mt in FY19, and with a target to double steel capacity in a decade, India needs to discourage export of iron ore, it argues.
Iron ore exports have continued to increase despite the 30 per cent duty because exports continue to be lucrative, it says. “There is a huge margin of over 76% ($43 a tonne) in spite of the 30 per cent duty and a margin of 36 % for low grade ore below 58 FE,” it said.
Steelmakers would ideally prefer high grade iron ore lumps, but its availability is limited. The immovable stocks at mines are also on account of many beneficiation plants being idled – a total capacity of 47 mt in Odisha alone - and pellet capacity being currently underutilised, PMAI countered.
Half of the 75.68 mt of iron ore fines stockpiled in Odisha is above 60 Fe grade ore that can be beneficiated for use in domestic steel plants. The PMAI also blames the Odisha government from dissuading buyers by insisting on charging the same royalty rate on fines as it does on lumps, a matter that is currently sub judice. The 39.25 mt that’s lying in Jharkhand is mostly in captive mines of Tata Steel and SAIL.
Source: Economic Times |
