Mines Min examining 5% export duty on iron ore pellets

The Mines Ministry is examining the recently levied 5 percent export duty on iron ore pellets following representations from various manufacturers opposing its imposition, and would write to the Finance Ministry on the matter soon. The Mines Ministry was not consulted by the Central Board of Excise and Customs (CBEC) or by the Finance Ministry when the duty was imposed on January 27, said a senior official. He said the Mines Ministry has received several representations opposing imposition of the duty. When asked about this, Mines Minister Dinsha Patel said: "We will give whatever representation is required to the Finance and Commerce Ministries. This is an issue concerned with the Finance Ministry, they have done it as per their own way. We will soon give our own report on it."

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Speaking to reporters after presenting National Geo-science Awards-2012, he also said that domestic pellet manufacturers need to be encouraged as it will help in removing the scarcity of iron ore. Pellets are value-added products of leftover material or low grade iron ore and are used in steel-making. In recent times, they have emerged as a major product for iron and steel industry in the country due to scarcity of ore in some regions following mining bans in Karnataka and Goa. Opposing the duty, various pellet manufacturers and their industry associations have given representation to the government, crying foul and terming the move "retrograde". They had said in past that the move would lead to closure of many units and the country will be deprived of valuable foreign exchange.

According to industry estimates, India's pellet production capacity is currently at about 60 million tonne and has risen manifold since 2010-11 as government then encouraged value addition of iron ore fines. Opposing the imposition of duty, Pellet Manufacturers Association of India (PMAI) had said that the decision was based on "erroneous facts" and of the total pellet production, current exports is over 1 MT only and accounts for 1.2 percent of the installed capacity. Moreover, the current capacity utilisation of pellet industry is less than 50 per cent owing to lower off-take by the steel industry, the PMAI had said. Export of raw iron ore or fines and lumps already attract an export duty of 30 percent.