KOLKATA (miningweekly.com) - The upsurge in international iron-ore prices, even if sustainable, will not have much impact on the liquidation of stockpiles across Indian provinces owing to skewed export tariffs.
The mining industry has contended that abolishing the export duty on low-grade iron-ore fines, while keeping the tariff in place for high-grade fines and lumps unchanged at 30%, would likely only have limited salutary impact on production in the western Indian province of Goa.
According to an official with the Federation of Indian Mineral Industries (FIMI), the representative body of miners, the zero rate on exports of low-grade ore would revive production and exports from mines in Goa, but the stockpiles across the country, estimated at 128-million tonnes, would not be impacted as the latter comprised mostly high-grade fines and lumps.
He said that at the current export tax of 30%, such high-grade fines and lump stockpiles would not find many takers overseas even with local export offers moving above $60/t.
Elaborating, he said that of the total stockpile in the country, the eastern Indian province of Odisha accounted for around 77-million tonnes of high-grade lumps and fines but miner-exporters and traders were still concluding only limited export transactions, even after revival of international prices, as the 30% levy continued to negate export margins.
By increasing the export tariff differentials between low- and high-grade iron-ores further, as weighed in the national Budget placed before Parliament, the government had skewed the tariff structure on iron-ore exports, which would benefit a small section of mines in Goa, while leaving other miners producing higher grade ore, high and dry, the official added.
He said that local-level regulations also prevented miner-exporters from pushing greater volumes in the domestic market.
For example, Odisha regulated that at least 50% of production from noncaptive mines had to be earmarked for steel mills in the region, but the latter were not willing to increase volume offtake in the midst of depressed steel prices.
Claiming that the present export tariff structure would "kill the Indian iron-ore mining industry", FIMI said that on one hand there was no domestic demand for increased production, while on the other the provincial governments were moving to get currently closed mines back into operation, when the reality was that even existing operational mines were being threatened with closure by mounting stockpiles.