KOLKATA (miningweekly.com) - The Indian government has imposed a 5% tax on the export of iron-ore pellets in response to demand from the domestic steel industry.
The Indian steel industry made representations to government that a nil rate of duty on exports of iron-ore pellets and a 30% tax on the export of iron-ore fines had led to a situation in which pellet exports was rising sharply through diversion of fines, leading to a shortage of raw material at the local steel mills.
The differential rate of duty on iron-ore fines and pellets was showing divergent trends in exports of the critical raw material. Taking advantage of a nil rate of export duty, iron-ore pellet shipments from the country increased 111% to 435 000 t during April to October 2013, compared to 40 000 t during the corresponding period of the previous financial year, with the mining industry expecting that total pellet exports during 2013/14 would touch a level of around 800 000 t.
During the April to October period, iron-ore export was estimated at 8.43-million tonnes, down 43.5% over the corresponding period of previous year.
India had about 36 iron-ore pelletisation plants operated by steel companies, as well as standalone raw material companies like KIOCL (formerly Kudremukh Iron Ore Company Limited), with combined capacity of around 63-million tonnes.
Earlier this month, the Associated Chamber of Commerce and Industry, an industry representative body, wrote to the federal Finance Minister pointing out the sharp rise in iron-ore pellet exports, owing to the nil rate of tax, which had accentuated the shortage of the raw material faced by domestic steel companies at a time when several iron-ore mines, in provinces such as Karnataka and Goa, continued to remain closed following investigations into illegal mining.