Miners urge govt not to impose export duty on low grade iron ore

Miners' body FIMI has urged the government not to impose any export duty on low-grade iron ore, stating that any such move would cause a significant loss of state revenues and employment and also affect foreign exchange earnings.

In a representation to the government, the Federation of Indian Mineral Industries (FIMI) said the mining sector was adversely impacted when in May 2022 the export duty was imposed on low-grade iron ore fines and pellets. The government, however, withdrew the tax in November same year.

A major share of the mining sector's contribution to the country's GDP is accounted for by iron ore among the non-coal minerals. Iron ore mining also significantly contributes towards creating jobs with employment of about 5 lakh persons --45,000 direct and 4,50,000 indirect, it said.

More than 90 per cent of the country's overall iron ore shipments go to China. "We request that any proposal for banning, restricting exports of iron ore and pellets may kindly not be considered and the status quo of nil export duty on these products be maintained," the miners' body said.

With the opening of new mines and expansion of existing mines the iron ore production capacity is likely to rise to 330 million tonnes in FY'25. But if there is a ban on exports of iron ore or a duty is imposed on its exports, in such a scenario the production will drop to 225 million tonnes, it said.

In the mining of iron ore, lumps are generated to the tune of only 25-30 per cent and the balance of iron ore is in the form of fines.

"The fines below 58 per cent Fe are required to be kept in the mining lease area only as these cannot be utilised by the steel industry specially secondary steel sector," it said.

The non-removal of low grade iron ore from the mines restrict the production of lumps also and becomes an environmental hazard besides limiting scientific mining.

Thus accumulation of iron ore fines in the mines also leads to the restricted availability of lumps in the market which in turn adversely impacts the steel industry, it said.