Miners hail move against export cap, profits still a worry

Although the mining industry has welcomed the group of ministers' stand against capping iron ore export, its representative body, the Federation of Indian Mining Industries (FIMI) is still sceptical about the firms' profits in this fiscal.

"I see our exports going down by 25 per cent and consequently, bottom lines being hit by about 20 per cent, because of the rising rupee and the export duty," said Rahul N Baldota, vice-president, FIMI, and Executive Director, MSPL Ltd.

The rupee has appreciated by 9 per cent in the last six months, which miners say makes exports expensive by Rs 200-250 per tonne. The government had, earlier this year, levied an export duty of Rs 300 per tonne on export of fines with more than 62 per cent Fe content and Rs 50 per tonne on lower-grade fines

"We welcome the policy, which has upheld most of the Hoda Committee's recommendations, but the duty still hurts the industry. It comes to Rs 340 per tonne when we add cess and moisture," Baldota said.

Out of the 93 million tonnes of iron ore that India exported last year, 74 million tonnes had more than 62 per cent Fe content.

A majority of iron ore exporters reported a 10 per cent dip in their top line in April-May.

Analysts, however, say the projection of a 20 per cent hit on profits is slightly exaggerated. "Although the duties and rupee appreciation prevent miners from making as much money as they could have, this is compensated to some extent by a strong demand for the ore. The global prices of iron ore are heading north and Indian miners have increased prices simultaneously," an analyst said.