Curb iron ore exports via profit tax.

New Delhi Indian industry body Assocham called for the levy of a 40 per cent super profits tax on mining activities in a bid to curb exports of iron ore.

The demand coincides with a similar proposal made to the Finance Ministry by the Mines Ministry for a windfall tax on domestic miners.

The association also supported the Steel Ministry's demand for a complete ban on iron ore exports.

"Assocham has sought a complete ban on exports of iron ore having more than 60 per cent iron content in it... 40 per cent resource rent tax uniformity should be imposed across the mining sector to check the windfall profits made by iron ore miners in case the former cannot be considered," the chamber said in a statement.

It said a resource rent tax, if levied, could check "windfall profits made by iron ore miners."

Assocham said that it has informed Prime Minister Manmohan Singh that the present duty structures have failed to restrict exports of iron ore.

In April, the government had raised the export duty on iron ore lumps to 15 per cent from 10 per cent. At present, there is a 5 per cent export duty on iron ore fines.

It said that China has been continuously increasing export tax on commodities like coal, coke and steel products in order to conserve the raw materials, used for making steel.

Meanwhile, Australia, which had earlier this year announced the introduction of a 40 per cent Resource Super Profits Tax, has now remodelled it as Mineral Resources Rent Tax and lowered the proposed levy to 22.5 per cent, which may be introduced by 2012.

"The chamber has observed that windfall profits that are being reaped by a handful of private miners would have far reaching consequences that may go beyond mere profits. Such abnormally high profits not only impact development of any particular industry, but has its fallout in the political stability of some of the states," it added.

Taking a dig at miners who claim that the Indian steel industry does not have the capability to make steel out of iron ore fines, Assocham said, "The private iron ore miners that are making a windfall profit through iron ore exports have created a myth that iron ore fines are laying in excess in India, as the industry is not equipped to use the same.

"However, it is a total distortion of the facts, as most of the integrated steel plants using sinter and pellets use iron ore fines extensively, which results in increased efficiency of the iron-making process, it said."

Source : expressindia.com