The Steel Ministry has made out a strong case for imposing 30 per cent ad valorem customs duty on iron ore exports,in the wake of exports growing three-fold in a decade. It has told the Finance Ministry that making ore exports less lucrative would force miners to sell ore within the country,which would ensure raw material availability for the domestic steel industry. In a letter on November 17,steel secretary Pradeep Kumar Misra told his finance ministry counterpart RS Gujral that iron ore exports have soared by 200 per cent between 2001-10 and about 50 per cent of the total ore mined in the country are exported. He said exports have jumped from 37.49 Million Tonne (MT) in 2000-01 to 117.37 MT in 2009-10. Citing the draft report of the Working group on steel for the 12th Plan,Misra said home-grown steel makers would require 206 MT ore per annum by 2016-17. Considering the trend of production of iron ore for the past few years ore production is stagnating at about 210-215 MT per annum during the past four years,he said. The production will get further reduced in the coming years due to stricter enforcement of environmental norms. The recent orders of the Supreme Court suspending ore production in Bellary,Tumkur and Chitradurga of Karnataka is a case in point, Misra told Gujral. He said that an increase in the duty from 5 per cent to 20 per cent ad valorem from March 1 had resulted in the prices of low grade ore reducing significantly during the first and second quarter of the current fiscal. Exports have dropped by 24 per cent in March. While ore exports have ceased from Karnataka,they were continuing from Jharkhand and Orissa as prices of the mineral are still attractive abroad especially China. Shortage of ore in south India could lead to curtailment of steel production leading to inflationary pressures on steel prices,. which could have undesirable effect on the overall economic growth, Misra said in his letter.
