Export duty on low-grade iron ore to have adverse ramifications: Miners’ body

New Delhi: Miners body FIMI on Monday sought to withdraw the government's decision to impose the export duty on low-grade iron ore, saying the move will have adverse ramifications not only on the iron ore mining industry but also on the supply of raw material to downstream users.

On Saturday, the government had raised the duty on exports of low-grade iron ore to 50 per cent from nil. The move was aimed at increasing the availability of raw materials for domestic steel manufacturers and other users of iron ore.

FIMI, however, urged finance minister Nirmala Sitharaman to review the decision and demanded its immediate withdrawal.

"Imposition of export duty on all grades of iron ore is self-defeating. In a mine, ores of different grades are produced, whereas the steel industry procures only high-grade ore of plus 58 per cent Fe. The low grade thus gets accumulated at mines. If it is not removed, it will occupy space which will affect mining operations, leading to shortage," Federation of Indian Mineral Industries (FIMI) Secretary-General RK Sharma said over phone.

Since there's no demand for low-grade iron ore in the country, export is the only option for miners. With higher export duty, this becomes unviable. If mines close because of this, this will lead to massive job losses, making it self-defeating, Sharma said.

"The imposition of export duty on iron ore of below (-58 percent Fe) has wider and adverse ramifications… The decision taken for the imposition of export duty on low-grade iron ore… may kindly be reviewed and completely be withdrawn as was prevailing hitherto," FIMI said in its letter to the finance minister.

Currently, the non-moving stock of more than 121 million tonnes of low-grade iron ore is lying at mine heads and in dumps in the country. Owing to the fact that there is no domestic market for such low-grade iron ore, there is no option but to export this low-grade ore which is mainly in the form of fines.

China has been the main market for Indian low-grade iron ore fines. However, owing to depressed demand coupled with softening of prices, the demand for Indian low-grade iron ore fines has been declining.

While during 2020-21, the exports of low-grade iron ore were 34.26 million tonnes, it declined to 12.83 MT during 2021-22.

"As such any imposition of export duty will lead to complete elimination of exports of low-grade iron ore from the country, adversely impacting the foreign exchange, availability of domestic raw material and the employment," the letter said.

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