Displeased with a steep hike in duty on iron ore exports, Mines Ministry today described the move as ill-advised stating India ships only 'fines' which cannot be entirely used by domestic steel (rpt steel) industry for want of technology.
"If there are no domestic takers and exports are discouraged, what will happen?" Mines Secretary S Vijay Kumar told PTI.
India, which produces 218 million tonne of iron ore, exports half of the quantity - most of which is in the form of fines.
The fines contain less of iron and only the big ones have the required technology to make use of the same.
The government had hiked export duty from five to 20% on fines and from 15 to 20% on 'lumps' in February.
The move did not go well with the Mines Ministry as also the iron ore miners even as the steel industry welcomed it.
With requirements for fines not exceeding 30 million tonne annually, the country is left with a big surplus.
"India uses fines for steel making only in the integrated steel plants, where there is sintering capacity," Kumar said.
He said that steel makers should be encouraged to go in for fresh capacity with built-in technology to process the fines but without captive iron ore mines, so that the existing miners can also survive.
The idea is to encourage the steel makers to outsource their requirement from the existing mines.
Besides, country's capacity for pelletisation, where fines are made fit for use in steel-making, will have to increase.
"Our pelletisation capacity is low. The only other way out is to create create sinter capacity in the steel plants and use fines preferably sourced through long-term arrangements.
"I will happy to see that happen...But that is unlikely in the short term," he said.
The export duty hike has hit the Goanese miners hard since 78% of the iron ore produced in the state is in the form of fines, Kumar said.
Miners in Karnataka would also suffer. Ore from Karnataka is first shipped to the neighbouring Goa where it is blended for exports to China, India's major buyers of iron ore.
