KOLKATA (miningweekly.com) - Indian steel producers have sought an export duty of 30% on overseas shipments of iron-ore pellets, on par with the duties on exports of iron-ore fines and lumps.

In a communication to various government departments, steel producers maintained that the current nil rate of export duty on iron-ore pellets had led to a sharp rise in moving the value added raw material overseas, while domestic industry was facing a shortage of iron-ore for its steel mills.

According to the Associated Chamber of Commerce and Industry, a New Delhi-based industry representative group, the sharp rise in iron-ore pellets was the result of the difference between export duty on pellets and fines to the detriment of raw material supplies to local steel producers.

Another industry body, the Indian Chamber of Commerce, has written to the Finance Ministry pointing out that iron-ore exporters were circumventing the 30% export duty on lump and fines exports by shifting to exporting pellets which did not attract any export duty.

The chamber claimed that this had further worsened raw material security for domestic steel plants already reeling from a shortage of iron-ore in the wake of a ban on mining imposed in several provinces such as Goa and Karnataka, following court orders on illegal mining.

Taking advantage of the nil rate export duty, iron-ore pellet shipments from the country increased 111% to 435 000 t between April and October 2013, compared to 40 000 t during the corresponding period of the previous fiscal year, and the mining industry expected that total pellet exports during 2013/14 would touch a level of around 800 000 t.

During the April to October period, iron-ore exports were estimated at 8.43-million tonnes, down 43.5% from the corresponding period of the previous year.

Currently there were around 36 iron-ore pelletisation plants operated by steel companies and standalone raw material companies, such as KIOCL (formerly Kudremukh Iron Ore Company Limited), with a combined capacity of around 63-million tonnes.