Minister writes to PM, Sonia on ore export duty

Irked by the export duty on iron ore, which many feel threatens to destroy the mining industry, minister of mines Sis Ram Ola has written to Prime Minister Manmohan Singh and UPA chairperson Sonia Gandhi calling for a rollback of the duty. In the letter, submitted to the prime minister’s office (PMO) on March 13, Ola said that the duty has been enforced without consulting the ministry, adding that it would in no way benefit the steel industry.

“The nature of exports is in the shape of fines. With very limited sintering capacity within the country, the export of iron ore does not in any way curtail the requirement of the steel industry, which is not using the fines in any way,” the letter said. Terming the imposition of the duty premature, it said that the matter should have been analysed with the ministry before the Budget announcement. Ola echoed the arguments of the mining industry that there would not be any resource crunch in the country due to the coming capacity expansions of the steel sector. “With around 25 billion tonnes of ore reserve and current consumption of only a third of the ore production, there are sufficient resources available for any enhanced capacity in steel manufacturing within the country,” it stated.

The Rs 300 per tonne duty is expected to generate revenues of Rs 3,000 crore but the ministry has argued that it “will result in a combined loss of Rs 7,000-8,000 crore as the decline in iron ore exports will be to the extent of 40-50 per cent of the current level of 100 million tonne”. Currently, the country is earning nearly Rs 18,000 crore through export earnings. The duty is believed to have already impacted ore exports from India to China, with the latter announcing a complete ban on ore from India. With prices shooting up by $7-8 per tonne, India is losing out to Brazil and Australia.