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Opposition to easing curbs on iron ore exports is increasing. Joining the steel industry in its campaign against relaxation of export duty on iron ore, the ministry of heavy industries and public enterprises has appealed to the Prime Minister to reconsider the proposed move.
“Starving the domestic steel industry of critical raw material and allowing its exports may result in lower production and availability of steel to the domestic manufacturing industry, especially the automobile industry, which is undergoing a severe recessionary phase; it can ill afford any supply shocks,” Heavy Industries Minister Praful Patel wrote to Prime Minister Manmohan Singh. A copy of the letter is available with Business Standard.
Addressing a public meeting of an industry chamber last month, the prime minister had said the government was considering easing the export duty on iron ore to encourage exports and help narrow the current account deficit (CAD). Patel said with the drastic fall in the domestic availability of iron ore, imports of finished steel rose to 7.87 million tonnes (mt) in 2012-13. Simultaneously, for the first time, the country imported four mt of iron ore in 2012-13, compared with exports of about 100 mt in 2009-10. Last year, the steel industry also imported eight mt of scrap and direct reduced iron.
“The net foreign exchange earnings through the export of iron ore would, at best, be $100 a tonne, while the cost of importing steel would be $600 a tonne. From a CAD point of view, the economics don’t seem to justify encouraging exports of iron ore, if we are constrained to import steel,” Patel wrote.
Earlier, he had also written similar letters to Finance Minister P Chidambaram and Commerce and Industry Minister Anand Sharma.
Production of iron ore has fallen sharply—-from 219 mt in 2009-10 to 140 mt in 2012-13. This is primarily due to the closure of a large number of mines in Karnataka, following a Supreme Court directive, as well as the continuing ban on mining in Goa. Also, the enforcement of a strict regulatory regime in Odisha, after a report by the Shah commission, has substantially reduced production in the state. “These supply-side constraints are expected to stay in the foreseeable future and encouraging exports will only exacerbate the limited availability of iron ore and put pressure on prices to local manufacturers of steel,” Patel said.
He isn’t alone in opposing easing curbs on iron ore exports. Many other Members of Parliament (MPs) across party lines have expressed similar concerns. These include Nilesh Rane, Rudra Madhab Ray (Kandhamal, Odisha), Pradeep Majhi, Bibhu Prasad Tarai (Jagatsingpur, Odisha) and Anant G Geete, leader of the Shiv Sena Parliamentary Party. In a separate representation to the prime minister and the finance minister, these MPs have pleaded against relaxing the curbs on iron ore exports. They have also sought that the process of granting environmental clearances to allotted mines be hastened and steps be taken to augment the availability of iron ore by auctioning fresh mining leases.
“Starving the domestic steel industry of critical raw material and allowing its exports may result in lower production and availability of steel to the domestic manufacturing industry, especially the automobile industry, which is undergoing a severe recessionary phase; it can ill afford any supply shocks,” Heavy Industries Minister Praful Patel wrote to Prime Minister Manmohan Singh. A copy of the letter is available with Business Standard.
Addressing a public meeting of an industry chamber last month, the prime minister had said the government was considering easing the export duty on iron ore to encourage exports and help narrow the current account deficit (CAD). Patel said with the drastic fall in the domestic availability of iron ore, imports of finished steel rose to 7.87 million tonnes (mt) in 2012-13. Simultaneously, for the first time, the country imported four mt of iron ore in 2012-13, compared with exports of about 100 mt in 2009-10. Last year, the steel industry also imported eight mt of scrap and direct reduced iron.
“The net foreign exchange earnings through the export of iron ore would, at best, be $100 a tonne, while the cost of importing steel would be $600 a tonne. From a CAD point of view, the economics don’t seem to justify encouraging exports of iron ore, if we are constrained to import steel,” Patel wrote.
Earlier, he had also written similar letters to Finance Minister P Chidambaram and Commerce and Industry Minister Anand Sharma.
Production of iron ore has fallen sharply—-from 219 mt in 2009-10 to 140 mt in 2012-13. This is primarily due to the closure of a large number of mines in Karnataka, following a Supreme Court directive, as well as the continuing ban on mining in Goa. Also, the enforcement of a strict regulatory regime in Odisha, after a report by the Shah commission, has substantially reduced production in the state. “These supply-side constraints are expected to stay in the foreseeable future and encouraging exports will only exacerbate the limited availability of iron ore and put pressure on prices to local manufacturers of steel,” Patel said.
He isn’t alone in opposing easing curbs on iron ore exports. Many other Members of Parliament (MPs) across party lines have expressed similar concerns. These include Nilesh Rane, Rudra Madhab Ray (Kandhamal, Odisha), Pradeep Majhi, Bibhu Prasad Tarai (Jagatsingpur, Odisha) and Anant G Geete, leader of the Shiv Sena Parliamentary Party. In a separate representation to the prime minister and the finance minister, these MPs have pleaded against relaxing the curbs on iron ore exports. They have also sought that the process of granting environmental clearances to allotted mines be hastened and steps be taken to augment the availability of iron ore by auctioning fresh mining leases.
