SteelMin seeks PMs help to contain export of iron ore

Pointing out that the current export duty was grossly inadequate to contain rising export of iron ore from the country...

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Pointing out that the current export duty was grossly inadequate to contain rising export of iron ore from the country, steel minister Virbhadra Singh has sought the Prime Ministers intervention in seeking the imposition of at least 20 per cent ad valorem duty on export of all grades of the mineral by the finance ministry.

In a letter to Prime Minister Manmohan Singh,the steel minister said,at present,about 50 per cent of iron ore produced in India was being exported,mostly in the form of fines. In the past decade,export of Indian ore has jumped sharply from 37.49 MT in 2000-01 to 105.86 MT in 2008-09. Even during the first 10 months of this fiscal,ore export has risen about 10.5 per cent (during April-January 2009-10) to about 89.20 MT. By such unabated export,we are frittering away the advantage of domestic availability of quality iron ore, the minister wrote.

He further argued that that the long-term growth of the Indian steel sector depends upon the continued domestic availability of quality iron ore at an affordable price. Our country needs to take policy measures for curtailing export of iron ore so as to conserve it for long term requirement. The Group of Ministers set up to consider the new National Mineral Policy had also recommended that the conservation of iron ore resources of the country is of paramount importance and the same may be achieved by taking recourse to appropriate fiscal measures, Singh said in his letter.

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He pointed out that the trend of export of iron ore during 2008-09 and 2009-10 at the present duty of 5 per cent on ore fines and 10 per cent on ore lumps is not sufficient to curtail export of iron ore effectively and it needs to be raised. It is therefore,desirable that to effectively discourage export of iron ore,an appropriate export duty of minimum 20 per cent ad valorem be imposed on all grades and varieties of iron ore, he said,adding,though I have forwarded a proposal to the finance minister,I request your kind intervention for immediate imposition of minimum 20 per cent ad valorem duty,to encourage investments in the steel sector.

To bolster his argument,Singh cited that other countries being aware of the exhaustible nature of their non-renewable natural resources were taking measures to conserve them. China has imposed 40 per cent ad valorem duty on export of met-coke,which it did not lower even during the global economic slowdown. In his letter to finance minister Pranab Mukherjee,Singh pointed out that imposition of export duty generate revenue of at least Rs 6,000 crore per annum.