The Union government has proposed to remove the export duty on low-grade iron ore fines and lumps in a bid to make the domestic mining sector, particularly in Goa, competitive amidst a fall in prices globally.
“The export duty on iron ore fines with Fe content below 58 percent has been proposed to be reduced from 10 percent to nil while the export duty on iron ore lumps with Fe content above 58 percent will be brought down to nil from 30 per cent,” Finance Minister Arun Jaitley said while unveiling Budget 2016—17 in the Lok Sabha.
The government has been considering plans to reduce the export duty on iron ore as it wants to help revive the mining industry, which is facing tough times due to a softening of the global commodity market. Prices of the ore globally have plummeted to a decade low and there are few takers for the Indian material.
The intention is to help the industry stay competitive as globally prices of iron ore have, on an average, declined 40 percent and in the case of lower grades (below 58 percent), they have plummeted to a decade low, sources added.
There is a 30 percent export duty on iron ore fines with Fe content of 58 percent and above and 10 percent for below this content. For iron ore lumps, the duty is a flat 30 percent.
The current international prices for iron ore are $49-50 a ton. By reducing the export duty to 10 percent, there is a good chance of finding some takers for the ore.
This will also help in liquidating stocks ahead of the increase in production in the coming months.
A senior industry official said: “Last month, the government reduced the export duty on iron ore pellets to zero from 5 percent to make the commodity more competitive amid subdued demand and weakening prices.”
Similarly, for iron ore lumps and fines, the cut in export duty will help producers reduce their losses. Also, the export duty on iron ore shipped by state-run NMDC has been slashed to make it more competitive and a similar step can be taken for other exporters, sources added.