MUMBAI--Indian iron-ore miners are concerned that the imposition of export taxes on iron ores will reduce their export opportunities, but steelmakers planning to expand production will likely welcome the change.
India's federal government will likely soon introduce a 5% export tax on iron ore fines and raise the export duty on high-grade iron ore lumps to 10% from 5%, a steel ministry official said Monday. "Imposing an export tax on iron ore fines will hit our exports, as Indian ores will not be competitive in the global market," Federation of Indian Mineral Industries President Sidharth Rungta said.
The majority of Indian iron-ore exports are sold to China on a spot basis. The tax increase will likely add $4-$5 a metric ton to the cost of Indian iron ore, according to Chinese industry reports.
Spot prices for Indian 63.5%-grade iron ore fines rose to $120 a ton last week, their highest point since the onset of the global financial crisis. India's steel industry has been lobbying the government to restrict India's iron ore exports to ensure supplies of the raw material aren't exhausted in the near future.
Global steelmakers including Posco, ArcelorMittal and Tata Corus have predicated expansion plans in India based on iron ore supplies in the country. India, the world's third-largest exporter of iron ore, shipping out around 100 million tons annually, had imposed a 5% duty on iron ore lumps last December.
The country's total iron-ore output in the fiscal year ended March 31 exceeded 220 million metric tons. India has around 23 billion tons of iron ore reserves, the fifth-largest in the world, a large part of which is high-grade. Indian iron ore industry officials have said that exports of fines should be allowed freely as domestic steelmakers don't have the technology to utilize the fines.
Source : online.wsj.com