With the demands of the steel industry on conserving iron ore for their capacity-expansions becoming shriller, the Committee of Secretaries (CoS) has asked the Finance Ministry to consider increasing the export duty on iron ore lumps for raising revenue. The CoS also advised steel and mines ministries to do speak to miners to ensure that they enter Long Term Agreements (LTA) with steel producers to supply them iron ore (lump grade) at reasonable prices.

Steel producers have for quite sometime now been complaining that the miners are reluctant to supply the mineral to them at reasonable prices through LTAs.

Steel Ministry top brass told the CoS that although the producers have decreased their prices and promised to hold it for three months, they have expressed concern on increase in prices of ore lumps despite a levy of 15 per cent ad valorem export duty.

Iron ore producers other than state-run NMDC have increased prices of lump ore by Rs 500-1000 per tonne after the imposition of the said duty. Total consumption of iron ore was 85 mt in the last fiscal of which 41 mt were lumps and remaining 44 mt were low-grade iron ore.

The CoS was told that of the estimated exports of 93.17 mt of ore during 2007-08 about 12.7 mt were lumps including 5.3 mt with ferrous content below 62 per cent while the remaining were low-grade ore. The Steel Ministry had contended that banning export of ore which would enhance availability of the mineral by 7.4 mt but simultaneously it would entail a revenue loss of Rs 835 crore for the government.

... contd.