July 2, 2008
July 2nd (Business Standard) – Centre’s decision to impose 15 per cent export duty on iron ore has worried Goa’s mining lobby, which fears that the industry may face a severe setback on this account.
The duty, effective from June 13, 2008 is applicable to all kinds of iron ore, irrespective of its iron content.
The Central government in its circular had said that the duty structure is changed to further strengthen a policy regime that enables conservation of good quality ore and ensures its availability to domestic industry at a reasonable price.
But the mining lobby in this tiny coastal state has several apprehensions regarding the move.
“The increase will severely impact Goan iron ore industry,” Goa Mineral Ore Exporters Association President Shivanand Salgaonar told reporters here while briefing presspersons in presence of Chairman and Managing Director of Dempo group of companies, Srinivas Dempo, Sesa Goa managing director P K Mukharjee and others.
The increased duty will force the producers to stop extraction of low grade ore and its export, Salgaoncar said.
“This will affect the mining industry in particular and Goan economy in general,” he said.
Any effort to curb export of iron ore, without matching domestic consumption for the ore currently produced would severely affect the iron ore industry and the employment and economic activity dependent on it, he added.
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.
June 16, 2008
June 16th (Moneycontrol India) – Government has shifted to a uniform 15% ad valorem export duty on iron ore. The earlier duty was at Rs 300 per tonne on iron ore with 62% higher iron and Rs 50 per tonne on lower grade ore.
India’s iron ore prices have dropped 8-11%, due to rise in stockpile at Chinese ports and a slowdown in demand. PK Mukherjee, MD of Sesa Goa expects profits to be hit due to export duty hike. They will try and offset some losses by increasing volumes, he said.
Excerpts from CNBC-TV18’s exclusive interview with PK Mukherjee:
Q: Can you confirm for us what entirely the duty rates stand at for you adding the ad valorem and the kind of royalty rate you pay?
A: I think ad valorem rate for export duty is now very clear because it has been mentioned as 15% flat. So it will be on all exports of iron ore, 15% will be payable. On royalty we have been listening for a long time, but nothing has happened and no change has happened yet, but there is a talk of royalty to be converted from specific rate to ad valorem rate and different numbers are being talked about.
Q: How much would your profits and revenues be marked down by?
A: We are yet to do the calculation because we have got different types of materials for which we are paying export duty under the previous regime in any case; some export duty at Rs 50, some export duty at Rs 300. So one has to calculate and it all depends on which market we are supplying, whether lump sum market or spot market, and what sort of price realisation we are getting. But it will be very substantial.
Q: Where are spot rates ruling at right now and whatever the quantum might finally be, do you think you will be able to pass on the entire brunt of it to the consumer or the buyer?
A: Spot market at the moment is very subdued. In the last two and a half months, the spot market has come down by USD 15-20/tonne on higher grades and on lower grades it has come down much more. But with regards to passing on to consumers or buyers there is no export duty passing on. The market will bear the price it can absorb, that will totally be dependent on demand and supply and after that if the export price goes up, it’s not the consequence of the export duty, it is a consequence of tight supply situation and vice versa.
Q: Looking at the spot price situation and this export duty, would it be fair to say that Sesa Goa’s profits for this year would be substantially diminished from last year?
A: It will depend on volume; we are trying to increase our volumes from various sectors. So maybe through volume we will be able to recoup some of the loss in absolute numbers as compared to the last year. But one needs to also keep in mind royalty which is talked about; since April 1, post Railway Budget, railways have imposed revisions on ore which itself works out to 10% duty on all the materials which are going through railways.
June 12, 2008
June 12th (China View) – China’s trade surplus in May dropped 9.9 percent from a year earlier to US$20.2 billion after both export and import growth accelerated, the General Administration of Customs said Wednesday.
Exports increased 28.1 percent last month to US$120.5 billion, compared to growth of 21.8 percent a month earlier, while imports climbed 40 percent to US$100.3 billion, roaring past the 26.3-percent April growth.
“Thanks to many companies’ swift shift to higher-value-added products and stronger demand for low-priced products under a battered world economy, China delivered strong export growth in May,” said Zhu Jianfang, an analyst with CITIC Securities Co.
Stephen Green, an economist with Standard Chartered Bank (China) Ltd, said the nation is benefiting from its yuan, which is appreciating against the United States dollar, the currency in which oil and other raw materials are priced.
“China is gaining buying power and the accelerating export growth that suggests the notion that China’s exports are collapsing is wrong,” said Green. “The faster expansion of imports is partly due to higher prices of crude oil and iron ore on the global market.”
The yuan has risen 19 percent since China dropped the peg to the greenback in July 2005. It has gained 5.3 percent so far this year, compared to an overall 7-percent increase last year.
The mechanical and electrical-equipment sector was the star performer among exporters. In the first five months, sales in the sector jumped 26.1 percent to US$320.5 billion, accounting for 58.8 percent of the total products sold abroad.
In imports, the purchase value of primary products rocketed 69.4 percent due to higher costs. For example, the average import price of crude oil swelled 64.1 percent to US$689.9 per ton, while the volume of imported crude oil rose 12.7 percent to 75.9 million tons.
The overall trade value in May grew 33.2 percent to US$220.8 billion. It sent the nation’s trade figure in the first five months this year to US$1.01 trillion, a growth of 26.2 percent.
The trade surplus through May cooled 8.6 percent from a year earlier to US$78 billion.
During the first five months, the European Union remained China’s largest trading partner with bilateral sales of US$166 billion, advancing 27.9 percent. It was followed by the US and Japan, whose bilateral trade value rose to US$130.5 billion and US$106.5 billion respectively.
Emerging markets posted much faster growth in trade with China. India’s bilateral trade has surged 70.3 percent so far this year to US$24.2 billion.
May 29 (Chinamining.org) – China’s import of iron ore will continue to maintain high growth, but the growth will slow down, predicted by Feng Shuijun, deputy manager of China Iron and Steel Trade Company under the flag of China’s second iron ore trader China Iron and Steel Group.
Feng said that in a long-run, the imported iron ore will account for 50 percent of the total demand and China’s dependence on the imported iron ore will gradually decline amid the increase of domestic iron ore output.
Feng made the remark at the 2 International Meeting on China Steel-making Raw Materials and Steels, adding that China’s iron ore output will keep growing in the coming period.
He predicted that the iron ore output will grow at least 12 percent in 2008 reaching 792 million tons, up 85 million tons year-on-year and the crude steel output growth will drop to less than ten percent in 2008 after reaching 27 percent in 2005.
With the fast development of domestic mining industry and the expansion of the production capacity of overseas iron ore suppliers, the conflicts between supply and demand of iron ore in China will be eased.
China imported 383 million tons of iron ore in 2007 with dependence on overseas market exceeding 50 percent.
May 26, 2008
May 26 (Iron Ore Daily Post) – From about US$140/t in January this year, Indian iron ore spot prices are said to be reaching over US$200/t. India’s government now could revive the proposal to hike country’s iron ore export taxes.
The Indian newspaper The Telegraph says “Top officials said that a fresh proposal to replace a fixed nominal cess on ore export with a tax of 6-8 per cent of the value of export (ad valorem tax) might be on the government’s agenda. An earlier proposal to slap a 15 per cent tax on the value of export had been rejected after several rounds of meetings of a group of ministers, following objections by the commerce ministry. The commerce ministry was opposed to an increase in the tax because it would kill exports with ore firms making long-term commitments to buyers from abroad.”
India exports about 90m t/year of iron ore, almost 75m t/year only to China’s steelmakers.
This report was written by Iron Ore Daily Post. Contact us at firstname.lastname@example.org