New Delhi: The decision of the central government to abolish 30% export duty on chrome ore is a big setback for domestic ferro chrome producers and stainless steel companies. This announcement of the government in the Union Budget 2016-17 is a regressive step that will only result into efflux of already depleting and a very scarce chrome ore in India. This decision will impact the domestic ferro chrome producers and impact the survival of struggling stainless steel industry as ferro chrome is a vital input for production of stainless steel. “The government must review its decision in order to promote manufacturing and greater value addition of the natural resources. This would save lakhs of jobs and the ailing industry”, said Mr. S Bhattacharya, Director – Jindal Stainless Limited.
Currently, the ferro chrome plants are deprived of raw materials and struggling to get the Chrome ore at competitive prices. This move by the Government will make the operation of units completely unviable and bring the industry to closure. Removal of export duty would only encourage traders to mine the valuable resources and export it. This would lead to a demand supply imbalance and increase the domestic chrome ore prices.
The prices of ferro chrome ore and charge chrome globally have crashed to current lows and the Industry is struggling to survive presently, said Mr. S. Bhattacharya. Huge investments have been made by other Ferro chrome producers including Jindal Stainless Limited which has a installed capacity of 2,50,000 MT. Most ferro chrome producers have been suffering due to low capacity utilization, financial losses due to non-availability of chrome ore at economical price and are on the verge of becoming NPAs. The existing profit margins are not sufficient to service interest cost and loan repayments.
Indian chrome ore has higher Cr/Fe ratio which makes it of better quality. The exports of this chrome ore will only support the Chinese stainless steel industry which is completely dependent on imports of chrome ore. Globally, other countries restrict the export of this crucial raw and scarce raw material to support the domestic industry. Chinese stainless steel firms are already dumping cheap finishes stainless steel goods, further export of chrome ore will only give advantage to the Chinese players vis-a-vis Indian firms which are reeling under losses.
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