| India has raised the export duty on iron ore, likely increasing local prices and also deepening a slump in shipments of the steelmaking material from the world's third-largest supplier.
The government increased the tax to 30%, effective Dec. 30, 2011, from 20% on both iron-ore fines and lumps, according to an order posted on the Central Board of Excise and Customs website Monday. |
| The tax rise will likely hurt India's export competitiveness. India sells iron ore mainly in the spot market to China, unlike Australia and Brazil, the top two iron-ore producers, which sell the commodity mostly through long-term contracts.
Shipments from India decreased 28% between April and November to 40 million tons, according to the Federation of Indian Mineral Industries. Volumes have been hit by a mining ban in the southern state of Karnataka, a freeze on sale of old stocks in western Goa state and transport bottlenecks in the eastern state of Orissa. “Indian iron ore will no longer be competitive in the world market,” R.K. Sharma, the federation's secretary general. “This [export tax rise] will push the industry to the verge of dying.” With high export tax and railway freight, India's iron-ore exports won't exceed 50 million tons this fiscal year through March, he added. Source: Dow Jones |
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