India's export of chrome ore has reduced from 33.28 per cent of annual output in 2007 to 4.89 per cent in 2014. However, this trend is likely to be reversed with the removal of export duty as this will enable producers especially from China and Malaysia to dump cheaper ferro chrome into the country. Chrome ore production in the country touched a high of 3.3 million tonne (mt) in 2007, falling gradually to 0.54 mt in 2014-15 and 1.92 mt in 2015-16. Similarly, chrome ore exports from the country reached an all-time high of 0.11 mt in 2007 and finally falling to a lowly 94,000 tonne in 2014.
Ferro chrome producers with an installed capacity of 0.25 million tonne have made huge investments. Currently, the ferro chrome plants are deprived of raw materials and struggling to get the chrome ore at competitive prices. The government's decision on waiver of export duty will impact the domestic ferro chrome producers and also jeopardise the operations of stainless steel makers for whom ferro chrome is a vital ingredient.
"The government must review its decision in order to promote manufacturing and greater value addition of the natural resources. This would save lakhs of jobs and the ailing industry", said S Bhattacharya, director, Jindal Stainless Ltd (JSL).
The ferro alloys industry is in a precarious state presently due to adverse market conditions. In the future, "industry also faces threat of dumping of ferro alloys from Malaysia under FTA (Free Trade Agreement). Therefore, it is our earnest request to see the export duty on chrome ore is restored so that Indian ferro chrome producers have a level playing field," Manish Sharda, vice chairman, Indian Ferro Alloys Producers Association (IFAPA) said in the representations submitted to the Ministries of steel, finance and commerce.
Around 96 per cent of the chrome ore is used for ferro chrome production which in turn, is used in stainless steel making. With 70 per cent of the world's production of stainless steel taking place in Asia (China, Japan, South Korea & Taiwan), India is ideally positioned to cater to this requirement by exporting value added ferro chrome rather than by exporting chrome ore. Also, the country's stainless steel demand is expected to touch five million tonne in the next five years.
Indian chrome ore has higher chrome to iron ratio which makes it of better quality. The exports of this chrome ore will only support the Chinese stainless steel industry which is completely dependent on imports of chrome ore.
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"The domestic ferro chrome manufacturers are operating in losses and most of the small manufacturers are operating just to utilise the power from their captive power plants. On the other side, condition of ferro chrome manufacturers is further worsened due to the artificially high chrome ore prices maintained by Odisha Mining Corporation (OMC) through e-auction process", said N C Mathur, president at Indian Stainless Steel Development Association (ISSDA).
Chrome ore is a scarce resource and export duty was imposed in 2007 with a view to conserve it for domestic value addition which has a multiplier effect. Presently, the country has only 0.6 per cent of the global chromite reserves.