Reducing export duty on all grades of iron ore to 10 per cent, as proposed by the Mines Ministry, will help clear huge stockpile of around 128 million tonnes of the ore with three states of Jharkhand, Odisha and Karnataka, say sources.
The government is mulling reducing export duty on iron ore as it wants to help revive the mining industry, that is facing tough times due to softening of global commodity market. Prices of the ore globally have plummetted to a decade low and there are few takers for the Indian iron ore.
A top source said Odisha, Jharkhand and Karnataka are sitting on a huge iron ore stockpile of about 128 MT -- over 100 MT of fines and 27.8 MT of lumps -- with Odisha accounting for a lion's share.
"Current price for this is USD 39-40 a tonne excluding DMF, NMET, royalty and transport. By bringing the export duty to 10 per cent there is a good chance to find some takers for this iron ore. This will help in liquidating stocks ahead of the increase in production in the coming months," he added.
Reducing export duty will bring the cost at break even point for the miners and will help in pick up of iron ore stocks lying at places near to the ports, he said.
The proposal to cut export duty across all grades of iron ore to 10 per cent has been made by the Mines Ministry to the Finance Ministry and is likely to be included in the Budget, which will be presented on February 29, sources said.
The intention is to help the industry stay competitive as globally prices of iron ore have on an average declined by 40 per cent and in case of lower grades (below 58 per cent) have plummeted to a decade low, they added.
There is a 30 per cent export duty on iron ore fines with Fe content of 58 per cent and above and 10 per cent for below this content. For iron ore lumps the duty is flat 30 per cent.
Confirming the development, a senior government official said: "Last month government reduced export duty on iron ore pellets to zero from 5 per cent to make the commodity more competitive amid subdued demand and weakening prices."
Similarly, for iron ore lumps and fines the cut in export duty will help the producers to cut their losses. Also the export duty on iron ore shipped by state-run NMDC has been cut to make it more competitive and a similar step can be taken for other exporters, he added.
The Mines Ministry with a view to support the Goa mining industry has written to Finance Ministry to reduce the export duty on low grade of iron ore with Fe content below 58 per cent to zero from the present 10 per cent.
Earlier this week, Mines Secretary Balvinder Kumar said: "We have recommended to the finance ministry scrapping 10 per cent duty on iron ore exported from Goa. We will recommend a reduction in export duty on high-grade iron ore (Fe content over 58 per cent). Quantum will be decided in a day or two."
Last month, Goa's mining industry body GMOEA wrote to the Prime Minister's Office, seeking to remove 10 per cent export duty on low grade iron ore fines and 30 per cent export duty on iron ore lumps irrespective of the grade.
