KOLKATA (miningweekly.com) - Sharp divisions have once again surfaced between the Indian government and the mining and steel industry, with renewed debate on whether to ban iron-ore exports from the country.

The airing of fresh points and counter-points on the issue has been triggered by reports that a large section of the Parliamentary Standing Committee on Coal and Steel was in favor of recommending a blanket ban on exports of all grades of iron-ore in view of dwindling production and the shortage of the raw material faced by domestic steel mills.

Reflecting conflicts within government around the contentious issue of imposing a ban, Mines Minister Dinsha Patel took an opposing stand, seeking from the Finance Ministry an immediate reduction in iron-ore tax on the grounds of rising stockpiles at pitheads, and suggesting cutting the levy from the current 30% to 15%.

In the opposing corner, a strategic advisory body within the Steel Ministry recommended that iron-ore policy should be geared towards gradually reducing exports to 20% of total production from the approximately 50% level at present, and that a roadmap be chalked out for the gradual phasing-out of exports.

Joining the fray have been various segments of the iron and steel industry, taking sides depending on their respective interests.

The Associated Chambers of Commerce of India, representing steel-producing companies, has warned the government against demands from miners for a reduction of export duty, urging continued government vigilance against the threat of "rampant illegal mining and unrestrained iron-ore exports", as had occured in the past, and that interests of domestic steel industry receive government attention and priority.

Opposing this viewpoint, the Federation of Indian Mineral Industries, representing miners, made a representation to government in which it termed the Indian steel industry ‘inefficient’ and suggested that the high levy on iron-ore exports was an indirect subsidy to the inefficient production of steel companies.

The mining body maintained that the duty on low-grade ore made export unviable and uneconomical and that the extracted low-grade ore remained dumped at pitheads, which destroyed the environment as a result of ore piling up on dumps.

Indian iron-ore exports during April to November 2012 were almost 62% lower, at 15-million tons, compared with the previous corresponding period, following a ban and restriction on mining imposed by the Supreme Court in the wake of illegal mining, restrictions on transportation along roads to ports and a high export levy.

Indicative of the shortage of raw material from domestic sources was the six- to seven-million tons of iron-ore imported by local steel mills from April to December 2012. According to industry estimates, Indian iron-ore production during 2012/13 would be down by 70-million to 100-million tons from the 208-million tons produced in 2010/11.

Industry sectors favouring a ban on exports pointed out that if current export levels, which amounted to around 50% of production were maintained, only 30-million to 35-million tons of ore would be available to those steel mills without captive mines.