Reuters | Mon Jul 19, 2010 | 5:55pm IST
The government has no plans to curb iron ore exports, a senior government official said on Monday, easing concerns of an imminent hike in export duty. "At the moment there is no such formal proposal," said the official, who is close to formulating policies in the mining sector and who declined to be named. "After the last hike (in April), there is nothing on the table." Steel Minister Virbhadra Singh said last Friday India’s export tax on iron ore should be raised to at least 20 percent, as more of the non-renewable resource should be conserved for domestic steelmakers. However, an iron ore analyst with a foreign institutional investor said the possibility of a hike in iron ore export taxes in future could not be ruled out. "The trend in mining levies is higher – if you look at royalties, transport fees and taxes," the analyst said. "It is possible that on iron ore lump exports there could be a hike to 20 percent." The analyst said iron ore fines could also be subject to an upward revision, although the government is unlikely to cease exports altogether.
India’s steel industry has been lobbying for curbs on iron ore exports so that more of the resource is available to them at low prices. India last raised the export duty on iron ore lumps in April to 15 percent from 10 percent. Last December, it introduced a 5 percent export duty on iron ore fines. The government official said curbs on iron ore fines, the powdery byproduct of mining iron ore lumps, was not feasible due to a lack of demand in the domestic market. Over 70 percent of India’s iron ore exports comprise fines that are mostly bought by China, which has the technology to blend it with high-grade ores procured from Australia and Brazil. "We feel if there is a complete ban there may not be full utilisation of the fines and that could lead to other problems," the official said.
The analyst with the institutional investor said any hike in India’s duty could help firm up the market in a limited way, but rising capacities of junior mines in Africa could boost global supplies. On Friday spot ores with 62 percent iron content ended at $117.9 per tonne, up $0.10 from the previous day. An exporter in Orissa state in east India said there was an improvement in inquiries, but they were coming mainly from speculative traders in Asia, not from Chinese steel mills. India, the world’s third-largest iron ore supplier, exports roughly half of its total iron ore production mainly to China, which is home to the world’s largest steel industry. In the 2009/10 fiscal year that ended in March, the country produced 226 million tonnes of iron ore, compared with 215 million tonnes in the previous year, mines ministry data showed.