FIMI wants zero export duty on iron ore upto 62%

The Federation of Indian Mineral Industries (FIMI), the mining lobby body has pitched for zero export duty on iron ore up to 62% iron grade. FIMI wants the Budget for 2018-19 to announce the change in duty structure.

Presently, export duty is waived off for iron ore exports of up to 58% iron grade. Justifying its demand for extending the duty waiver to up to 62% iron ore, FIMI pointed to the situation where iron ore inventory is piling up at mine heads due to lack of demand.

The domestic demand for iron ore is quite subdued due to slowdown in the Indian steel industry. The country produced 191 million tonnes of iron ore in last fiscal and against this, only 107 million tonnes was consumed domestically. Nearly 25 million tonnes were exported, mostly from Goa and smaller quantities from Odisha, the biggest producer.

With the production-demand imbalance in the domestic market, iron ore stockpile at mine heads has gone up to 149 million tonnes (as on March 31, 2017).

As of now, iron ore exports from Karnataka have been banned by the Supreme Court. The export duty on iron ore up to 58% Fe, mainly produced in Goa, has been done away to make exports viable from Goa. NMDC in Chhattisgarh (Bailadila mines) has dedicated railway line upto Vizag port and has been granted export duty relief (NMDC is charged export duty 10% on its exports). The only areas where there are surplus production and lack of adequate outlet are therefore Odisha and Jharkhand. The mines in these states are in interior and far away from ports. Due to non-lifting of the entire production, Odisha had a stockpile of 83.98 million tonnes and Jharkhand 38.85 million tonnes at mine-heads as on 31st July 2016.

And, the stockpile has been increasing over the years. The domestic steel industry, as well as sponge iron and pellet plants, requires 62% Fe grade ore. The stock at mine heads consists of mostly less than 62% Fe grade material, mostly iron ore fines.

Out of the total stockpile of 144.52 million tonnes, 122.83 million tonnes or 85 percent are in Odisha and Jharkhand. Odisha also accounts for 58 percent of the total stockpile in the country. It will be further observed that of the total stockpile, 70 percent are below 62% Fe (both lumps and fines). Fines constitute 93 percent of the all-India stockpile of below 62% Fe in these two states.

The increasing stockpile year after year is squeezing the available space in mines for continuing iron ore production. Unless the stockpile is liquidated, increase in production of iron ore would be affected.

Since there is no domestic demand for iron ore upto 62% Fe, FIMI feels that the only alternative is to export. The iron ore from Odisha and Jharkhand can be exported only from Haldia, Paradip, Vizag and Dhamra ports.

Even the Odisha chief secretary in his letter to the Union mines ministry in July 2016, recommended that the export duty on iron ore lumps and fines (Fe content 58% and above) should be reduced from 30 percent to nil in the interest of employment generation and mining revenue for development and welfare activities.”

Stockpile of iron ore at mine heads-:

Source:SteelMint, IBM, Nagpur
Quantity in MnT