Government may lower iron ore export duty if prices stay subdued

New Delhi: The Steel Ministry on November 12 said it may think of lowering export duty of iron ore from the present rate of 30 per cent if the prices of the key steel-making raw material remain subdued.

"We have not given a thought on this but, if the current situation continues in the coming days, we will have to think on this," Steel and Mines Minister Narendra Singh Tomar told reporters here. Tomar was answering to a question on if the government was mulling over reducing export duty on outbound iron ore shipments with the nose diving global price of the raw material.

The international price of the raw material, which is now ruling at its five-year low at USD 75 per tonne, has led iron ore exports unviable for the domestic producers. In a research note, released today, Citi has predicted an average price of USD 74 a tonne for iron ore in the first quarter of the next year, USD 60 by September 2015 and further down to USD 50 per tonne.

Some miners in low-grade iron ore producing state of Goa are not very enthusiastic about resuming their recently renewed mines saying with each tonne of production, they may have to end up shelling out USD one from their own pockets. Low-grade iron ore prices are trading at USD 50-55 a tonne now.

India, once world's third largest exporter of iron ore, is believed to become a net importer in current fiscal. Export of the raw material has come down drastically to 14.42 million tonnes in 2013-14 as compared to 117.37 million tonnes in FY10. Miners often blame the inflated export duty for the dip in shipments.

During the April-June quarter of the current fiscal, India exported 2.25 million tonnes of iron ore compared with 3.01 million tonnes in the same quarter last year. Miners' body FIMI said the situation can be improved drastically provided the government ensures speedy clearances and fiscal policies are reversed to pre-2010 level.

Private sector miner Sesa Sterlite recently pitched for scrapping 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.