Indian iron ore exports need tax relief to compete globally
Indian iron ore export mining industry, after its absence for four years from the international market, needs tax relief to compete globally, an industry official has said.
"If and buts are there as we return to the competitive international market," R K Sharma, secretary-general of the Federation of Indian Mineral Industries (FIMI) said at the fourth SINGAPORE Iron Ore Forum yesterday. "It will also be challenging to restart some of the mines after they have been closed for four years and flooded by the recent rainy season. Winning new contracts will be challenging," he said.
"The Indian iron ore exporters have contacts with Chinese buyers though their contracts have been cut-off for the last four years," Sharma said. But to support the exports, FIMI has renewed call for removal of export duty on high grade Iron Ore which is at 30 per cent. Delivering an industry address at the Singapore Forum, FIMI President H Noor Ahmed called on the Indian government to remove the export duty on high grade Indian iron ore as it has done so on the lower grade.
"FIMI is putting across (to the) Government of India that exports of iron ore will not lead to any scarcity of ore for the domestic steel plants, present or future. Rather more production will lead to more exploration and discovery of more resources and create more jobs," he added.
Noor Ahmed said past exploration has yielded 9.215 billion tonnes of iron ore, taking the total reserves to 31.323 billion tonnes as April 2013 from 22.108 billion tonnes in 2000. Only 2.041 billion tonnes were mined between 2000 and 2013. Sharma said the 30 per cent export duty should be removed and help Indian iron ore exports compete in the competitive market, where currently 62 per cent FE is priced at USD 51 CIF China.
He even called for a minimum cut of 10 per cent in the export duty as has been allowed for National Mineral Development Corporation (NMDC) Ltd, the largest state-owned miner which has continued its exports to Japan and South Korea over the past four years.
The higher grade Indian iron ore has to compete with the same material from Australia but it is better grade than those from Brazil, he pointed out. Indian iron ore exports peaked at 117.37 million tonnes in the fiscal year of 2009-2010, accounting for 53.7 per cent of the 218.55 million produced.
The exports have since been declining and trickled to 6.12 million tonnes or 4.75 per cent of the 128.91 million tonnes produced in 2014-2015, according to data from the Indian Bureau of Mines and Production.
"We expect some mines to start production and exports from October as most of the other mines a flooded following the rains," he said.
Goa, with its proximity to ports, will lead the exports from this year as its cost of internal transportation will be lower.
Though it would be difficult to project export volume in the absence of fresh contracts, industry sources expect Indian iron ore exports to reach 40 million tonnes in about two years, especially as Chinese steel mills continues piling up raw materials and ores.