India likely to lose out on iron ore exports to Brazil

The domestic iron ore mining sector may lose out to Brazil in terms of exports to China on the back of imposition of export duty, of Rs 300 a tonne. At present, the country supplies nearly a third (30 per cent) of the 315 million tonne of iron ore required by China.

Finance Minister P Chidambaram, citing the Hoda committee report on mineral policy, yesterday levied the duty on iron ore, in order to conserve the country's natural resources as well as raise revenues. "Whom will we sell the iron ore to, as the domestic steel industry doesn't require it. The logic given by the finance minister is wrong," Rahul Baldota, director of MSPL, said.

According to Industry experts, the local steel sector barely requires a third (50-53 million tonne) of the country's 155 million tonne iron ore production. Moreover, the steel industry needs only lump grade iron ore, while as much as 85 per cent of the exports are of fine grade iron ore. The country exported 90 million tonne of iron ore in 2005-06, accruing a revenue of $4 billion. Industry players feel exports are going to decline because of the duty imposition. Baldota said the country had an edge over many iron ore-producing countries such as Brazil because of its geographical proximity to China "� the largest market for iron ore.

"The duty, which is nearly $7 a tonne, will make our ore less competitive in the international market. Brazilians will have an edge over us in the Chinese market," he said.