On Monday, mining company FIMI sought to reverse the government’s decision to impose export duties on low-grade iron ore, saying the move would adversely affect not only the iron ore mining industry but also the supply of raw materials to low-grade users.
On Saturday, the government raised tariffs on low-grade iron ore exports from zero to 50 percent. The move was aimed at increasing the availability of raw materials for domestic steel makers and other users of iron ore.
FIMI, however, called on Finance Minister Nirmala Sitharaman to review the decision and demanded its immediate withdrawal.
“Imposing export duty on all grades of iron ore is self-defeating. In a mine, different grades of ore are produced, where the steel industry collects only high-grade ores plus 58 percent Fe. The lower-grade is thus deposited in the mine. If it is not removed, it will occupy space which will affect the mining activities, resulting in deficit, “said RK Sharma, Secretary General, Federation of Indian Mineral Industries (FIMI).
Since there is no demand for low-grade iron ore in the country, export is the only option for miners. The higher the export tariff, the more it becomes unusable. If the mines shut down because of this, it would cause massive job losses, make it self-defeating, Sharma said.
“The imposition of export duty on low-grade iron ore (-58 per cent Fe) has far-reaching and adverse effects … It has been decided to impose export duty on low-grade iron ore … please review and may be withdrawn altogether. It still exists, ”FIMI said in a letter to the finance minister.
At present, more than 121 million tons of low-grade iron ore is lying on the head and in the country’s dumps. Since there is no domestic market for such low-grade ores, there is no alternative but to export these low-grade ores, mainly in the form of fines.
China has been the main market for Indian low-grade iron ore fines. However, the demand for lower-grade iron ore fines is declining as well as the demand for suppression with falling prices.
In 2020-21, exports of low-grade iron ore were 34.26 million tonnes, down from 12.83 metric tonnes in 2021-22.
The letter said, “Since the imposition of export duty would completely stop the export of low-grade iron ore from the country, it would adversely affect foreign exchange, availability of domestic raw materials and employment.”