India’s Ministry of Steel and Mines is mulling options for fresh restrictions on iron ore exports from the country to reduce raw material costs for domestic steel mills, a ministry official said on Tuesday, June 7.
The ministry official said that, although no decision has been taken yet, he acknowledged that both an upward revision of the export tax on iron ore as well as the fixing of a quantitative ceiling on total outward shipments of the raw material from the country are under consideration to offer “raw material price protection” for domestic steel mills.
In terms of fiscal measures, five percent export tax on iron ore fines was in force for a very long time and this was increased to 30 percent in 2011, but, following repeated pleas from exporters, the tax was reduced to 10 percent early this year for all shipments of iron ore fines below 58 percent Fe content.
However, the mining industry has expressed strong concerns over the move claiming that local steel mills are definitely not facing any shortage of raw material, while, on the contrary, there is a glut of iron ore availability due to falling exports.
According to the Federation of Indian Mineral Industries (FIMI), iron ore production during the current year will surpass the 200 million mt mark, while iron ore inventory as of May 1 this year was estimated at 150 million mt, which clearly shows that there are no raw material supply issues facing local steel mills warranting more protection from the government.