Impose 20% export duty on iron ore: Assocham
The Assocham has made a strong recommendation of imposing 20% duty on exports of iron ore fines as against current rate of 5%, according to a statement released by the Chamber. This will not only curb illegal mining but also add extra revenue of Rs15,000 crore to the government exchequer, it said. The Chamber has suggested canalization of High Grade Iron Ore (Fe>60%) through the MMTC.
In view of the rise in illegal mining in the country for exporting high and medium grade iron ore, the Assocham President Dr Swati Piramal has recommended this two-pronged strategy to curb and reduce illegal mining and inflationary effects on Indian economy.
In a letter sent to the Commerce, Steel and Finance Ministers, she said "following the mining boom and ban imposed by the Chinese government on the imports of low grade Iron Ore having Fe less than 60%, iron ore miners have suddenly increased manifold their operations.
The Assocham president further said that Indian steel producers source from domestic miners with pricing parity equated to the spot export FOB-prices. In view of the high Chinese demand for Indian Iron Ore, aggravated by the oligopoly of the global mining majors, exports of Iron Ore from India have continued to remain in excess of 100 million tones.
Australia the 2nd largest global Iron Ore exporting country, has recently planned to levy a 40% Resource Rent Tax (super profit tax) uniformly across the mining sector. This is an extension of the taxation practices already being exercised by few countries such as Norway, Tajikistan, Latvia, Belarus and New Zealand, Assocham said.
The private Iron Ore miners, who are making a windfall profit through exports have created a myth that Iron Ore fines are lying in excess in the country and claim Indian steel industry is not equipped to use the same.
This is a total distortion of facts as most of the integrated steel plants using sinter and pallets where iron ore fines are extensively used. In fact higher usage of pallets and sinter go on to increase the efficiency of the iron making process, it said.
The second myth created by Iron Ore miners is that by increasing the export duty, Iron Ore exports will come down drastically and affect the economy adversely. According to Assocham, this argument is not tenable since we have seen during the economic downturn when the Iron Ore prices had crashed down to around $60, Iron Ore exports were not impacted at all and India still exported around a 100 million tonnes.
The Assocham President pointed out that Iron Ore and Coking Coal are the two primary input raw materials for manufacturing steel and contribute almost 65-70% of the total cost of production. In view of the constraints of availability and quality of domestic Coking Coal, integrated steel producers are compelled to import most of their requirements. Unfortunately, major global miners hold a strong oligopoly for Coking Coal and have been steering the market to their whims and fancies, the statement said.