NEW DELHI: Miners' body FIMI has pitched for a drastic reduction in export duty on low-grade iron ore to 5 per cent from the present 30 per cent saying that the current rate has rendered shipments unviable.
"We have requested the government to slash export duty on iron ore fines in the Budget to the level it existed prior to March 2011, at five per cent," R K Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI), said.
Export duty on the key steel-making raw material has gone up progressively from zero in FY09 to five per cent in FY10, to 20 per cent in FY11 and to 30 per cent in FY12, he said, adding "such high duty has rendered exports unviable."
"The export duty of 30 per cent on iron ore fines is deterrent to the effective functioning of the Indian mining industry," he added.
Fines, having low iron content, constitute around 92 per cent of the total iron ore exports, which stood at 60 million tonnes in 2011-12, down 39 per cent over the previous fiscal.
There is hardly any domestic taker for fines in absence of the necessary technology to use them for iron making. But, fines are inevitably generated as a co-product while producing Calibrated Lump Ore, which are used by domestic steel makers.
"The ratio of lumps to fines generation is around 30:70. So for every tonne of production of lumps, about two tonnes of fines are produced," Sharma said.
"Unless fines are evacuated from the mines, there cannot be further production of lumps for supply to the domestic user industries. This has resulted in a fall in production as mines pit are clogged with fines. Stocking of these fines for a longer period would create environmental hazards," he said.
The high duty on exports has also left India losing its competiveness in the global markets. India's share in iron ore export to China have come down from 20 per cent in 2007 to 11 per cent in 2011 and further down to eight per cent in the first half of 2012.