Feb 19, 2016 02:29 PM IST | Source: PTI

Govt may cut export duty on all iron ore grades to 10%

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.

Govt may cut export duty on all iron ore grades to 10%

Government is mulling to reduce the duty across all grades of iron ore to 10 percent, 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 percent and in case of lower grades (below 58 percent) plummeted to a decade low, the source added.

There is a 30 percent export duty on iron ore fines with iron content of 58 percent and above and 10 percent for below this content. For iron ore lumps the duty is flat 30 percent.

Confirming the development, a senior government official said: "Last month government reduced export duty on iron ore pellets to zero from 5 percent 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 percent to zero from the present 10 percent.

Earlier this week, Mines Secretary Balvinder Kumar said: "We have recommended to the Finance Ministry scrapping 10 percent duty on iron ore exported from Goa. We will recommend a reduction in export duty on high-grade iron ore (Fe content over 58 percent). 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 percent export duty on iron ore fines with Fe content below 58 percent and 30 percent export duty on iron ore lumps irrespective of the grade.

The industry body argued that prices of iron ore with Fe content of 56 percent 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.

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