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India needs to scrap export duty on iron ore in the face of sliding prices globally, especially on low grade that is exported from Goa to make mining a profitable proposition, Vedanta Resources said today.
"For the past few years the Goa mining sector has been shut down... The profitability is also being reversed as a consequence of rapid decline in global iron ore prices," Vedanta Resources CEO Tom Albanese told PTI.
He added: "Unfortunately in this environment where markets are low the Goa iron ore will not be very competitive. The export duty, which was placed by the government to capture some of the profits when prices were high, needs to be recalled."
Albanese, who is also the CEO of Sesa Sterlite, a Vedanta subsidiary, said "ores that have been typically mined in Goa including that of Sesa have been of a lower grade than typically desired by the Indian steel sector" and is exported where global prices had already nosedived.
The Finance Ministry is likely to soon take a call on the demand for withdrawal of export duty on iron ore to encourage outbound shipments.
There is 30 per cent export duty on iron ore at present.
As per industry experts the duty was imposed when prices of ore were sky-rocketing at USD 180-200 per tonne. They have plummeted to a 5 year low to USD 80 per tonne for best grades '63 Fe'. Iron ore grade produced in Goa is '58 Fe' or below.
"Goan ore price (usually 58Fe or below) is at USD 50-55 per tonne. With 30 per cent export duty and present prices, iron ore mining in Goa is a loss making proposition," said an industry official.
Albanese said Sesa Sterlite hopes to begin mining operations in Goa early next year after the apex court's decision in April to lift ban in Goa which was promulgated to check illegal mining.
Goa Chief Minister Manohar Parrikar has demanded that the Centre withdraw export duty on low grade iron ore.
Miners body FIMI had also requested the Centre to do away with export duty to help the sector. India is the third largest global exporter of the ore.
Iron ore exports declined by 61.46 per cent to USD 52 million in August.
The exports of iron ore, a key steel making raw material used to be about 100 MT, which declined to 62 MT in 2011-12, 18.37 MT in 2012-13 and 14.42 MT in 2013-14 on account of a number of factors including high duties and freight rates.
Domestic iron ore production has been on the wane and has declined to about 129 million tonnes in 2013-14 from 213.25 MT six years ago.
According to FIMI, about 62 MT of iron ore fines are lying unused at mine heads in the country.
