KOLKATA (miningweekly.com) – The iron-ore export duty has moved back to the centre stage in India, with iron-ore miners calling on government to announce a lower export tax when the national Budget is unveiled on February 1.

In response to the federal Finance Ministry’s invitation for input from all sectors, iron-ore miners have put forward that the forthcoming Budget should either prune the 30% export tax on high-grade iron-ore and 10% rate applicable for lower grade ores and fines, or scrap the duty structure for exports of the raw material.

Quick to counter the miners has been the Indian Steel Association (ISA), the representative lobby organisation of Indian steel producers. ISA believes that not only should the export duty be continued, a uniform higher rate should be imposed irrespective of the raw material grades to ensure adequate supplies to the domestic market to foster steel production growth, while ensuring higher value addition in the country.

As soon as officials in the Mines and Steel Ministries hinted that the government could take a ‘positive’ view on the miners’ case for a reduction in the export duty, ISA said in a communication “exports should be of value-added products and not raw materials. The basic principle should be to earn revenue, which would come from finished products, more than raw materials.”

As a counterpoint, iron-ore miners say that after five consecutive years of negative growth in iron-ore production, a reduction in the export levy should assist in achieving positive growth.

According to data from the Joint Plant Committee under the Steel Ministry, Indian iron-ore production registered negative growth rates of 20%, 19% and 15% in 2011/12, 2012/13 and 2014/15 respectively. Comparisons of iron-ore and finished steel production show that while the compounded annual growth over the last five years in the case of iron-ore was a negative 6.51% that for finished steel was a positive 4.58%.

Iron-ore exports during April to September this year was estimated at 7.5-million tons, up 300% on the corresponding period. If miners were to seize opportunities of higher international prices, a lower export duty would ensure better margin realisation for miners, an official with Federation of Indian Mineral Industries (FIMI) has said.

The Mines Ministry estimates that India will close the current financial year with iron-ore production of between 170-million and 175-million tons.  With the Indian export price for high-grade iron-ore fines (iron content of 63.5% and above) breaching the $80/t CFR China, the highest in the last 27 months, a lower export tariff would enable local exporters to gain competitive edge and push higher volumes in international markets, FIMI officials added.