Centre likely to cut iron ore export duty to 10% in Budget
The Government is mulling to reduce the duty across all grades of iron ore to 10 per cent, a move aimed at helping the industry stay competitive amid weak commodity market, which saw ore prices drop to a decade low. The proposal has been made by the Mines Ministry to the Finance Ministry and is likely to be included in the Budget, which will be presented on February 29, a top source said.
The intention is to help the industry stay competitive as globally prices of iron ore on an average have declined by 40 per cent and in case of lower grades (below 58 per cent) plummeted to a decade low, the source added. There is a 30 per cent export duty on iron ore fines with iron content of 58 per cent and above and 10 per cent for below this content. For iron ore lumps the duty is flat 30 per cent.
Confirming the development, a senior government official said: “Last month government reduced export duty on iron ore pellets to zero from 5 per cent to make the commodity more competitive amid subdued demand and weakening prices.”
Similarly, for iron ore lumps and fines the cut in export duty will help the producers to cut their losses. Also the export duty on iron ore shipped by state-run NMDC has been cut to make it more competitive and a similar step can be taken for other exporters, he added.
Besides, Mines Ministry with a view to support the Goa mining industry has written to Finance Ministry to reduce the export duty on low grade of iron ore with Fe content below 58 per cent to zero from the present 10 per cent.
Earlier this week, Mines Secretary Balvinder Kumar said: “We have recommended to the Finance Ministry scrapping 10 per cent duty on iron ore exported from Goa. We will recommend a reduction in export duty on high-grade iron ore (Fe content over 58 per cent). Quantum will be decided in a day or two.”
Last month, Goa’s mining industry body GMOEA wrote to the Prime Minister’s Office, seeking to remove 10 per cent export duty on iron ore fines with Fe content below 58 per cent and 30 per cent export duty on iron ore lumps irrespective of the grade.
The industry body argued that prices of iron ore with Fe content of 56 per cent have nosedived from USD 119 per tonne free on board (FOB) Goa in January 2011 to USD 21 a tonne in November 2015, making it unviable for miners to extract the ore with the current tax mechanism.