FIMI demands withdrawal of export tax on iron ore

June 22, 2008

June 22nd (Steel Guru) – BS reported that Federation of Indian Mineral Industries has demanded that the centre should withdraw the 15% ad valorem export duty imposed on iron ore last week.

In a statement, FIMI said that “If the objective of the government was to ensure that iron ore is available to domestic steel industry by imposing this duty, it is not going to be achieved because what is being exported is the surplus iron ore and definitely not at the cost of the domestic steel industry.”

Mr Rahul N Baldota president of GIMI said that the new tax would lead to a situation where iron ore exports from India would become economically unviable, leading to fall in production because only iron ore fines, which have no domestic buyer, are exported. He added that the railways have increased their freight by 70% in the last 2 months and royalty payable to the states is also expected to be 10% ad valorem shortly.

Mr Baldota said that, under this situation, additional 15% ad valorem export duty will make Indian miners lose out on the Chinese market because since Chinese buyers would then prefer Australian suppliers. He added that “The Chinese steel mills will not absorb the export duty on iron ore and hence the available window for large scale export to a market like China will be shut.”

FIMI is also peeved that the government has used the additional impost on the mining industry to recoup the loss of revenues on account of withdrawal of export duty on flat steel products.

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