Govt cuts export duty on low grade iron oresPublished by MAC on 2007-05-03
Govt cuts export duty on low grade iron ores
By Biman Mukherji
3rd May 2007
NEW DELHI (Reuters) - The government on Thursday slashed the export duty on low-grade iron ore to 50 rupees per tonne from 300 rupees after protests by the domestic ore industry, which had seen sales to the key Chinese market tumble.
The duty was imposed in February's Union budget to preserve ore reserves for the domestic steel industry.
"After extensive consultation with all stakeholders, I propose to reduce the export duty on iron ore fines with iron content below 62 percent to 50 rupees per tonne," Finance Minister Palaniappan Chidambaram told members of parliament.
Announcing some revisions to the 2007/08 budget, he said duty on higher grades would remain at 300 rupees per tonne.
One trade official said any benefit would be partially offset by a strengthening rupee, which is near nine-year highs at just over 41 rupees per dollar.
The finance minister also reduced customs duty on nickel to 2 percent from 5 percent, to ease problems facing stainless steel makers amid a surge in global raw material prices.
Iron ore exporters had protested the duty imposition, saying hardly any domestic steel makers were able to use low-grade iron ore fines, which make up nearly 80 percent of India's exports.
Fines must be made into pellets before being used in blast furnaces.
India exported 90 million tonnes of iron ore in the financial year which ended in March, a majority to China.
But Chinese firms cut purchases from India to a trickle after the tax was imposed, and shifted their focus to relatively cheaper Brazil and Australia.
Small shipments were still heading to China as port congestion in Australia -- which has pushed up world prices by $8 to $65 a tonne for medium-grade ore -- affected supplies.
"The reduction in export duty would help exports of low-grade iron ore to some extent, but the strengthening rupee against the dollar would cut back the benefit," said Rahul Baldota of the Federation of Indian Mineral Industries.