| Date: |
30-04-2010 |
| Subject: |
India Ups Export Tax, Rail Freight Charge on Iron Ore |
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NEW DELHI -- India raised the export tax on iron ore lumps and railway freight charge on iron ore meant for export Thursday, which is likely to reduce shipments and increase prices of the ore from the world's third-largest supplier.
Finance Minister Pranab Mukherjee told parliament the government has raised the export tax on iron ore lumps to 15% from 10%. Local steelmakers have been lobbying for export curbs to ensure future supplies.
India has installed steel production capacity of 72 million metric tons and plans to raise capacity to 115 million tons by Dec. 31, 2012. The country exported 106 million tons of iron ore in the year ended March 31, 2009, mainly to China. Of the total, lumps accounted for 10%-12%.
Total exports during the April-February period rose 8.7% from the year-earlier period to 102.36 million tons, data from Federation of Indian Mineral Industries, a trade body showed.
"An increase in export tax on iron ore lumps is likely to hit India's overseas shipments," Siddharth Rungta, president of Federation of Indian Mineral Industries, said, adding the country exports about 10 million tons of lumps, mainly from the western state of Goa and Bellary-Hospet region in the southern state of Karnataka.
Simultaneously, state-run Indian Railways raised the freight charges for iron ore meant for exports by 100 rupees ($2.24) a ton, the third increase since the middle of March. The railways have increased freight charges by 500 rupees/ton in phases from April and the latest hike will be effective till month-end from May 1.
"Weakening demand from China, which has softened in the past one week, and frequent increase in railway freight have hurt the trade," Mr. Rungta said.
Until the latest increase, freight charges accounted for about 80% of the cost of ore. About 60%-65% of Indian exporters depend on railways for transporting ore from mines to ports.
A stronger rupee, which has risen by about 12% on year against the dollar, is also likely to hurt iron ore exports, Mr. Rungta said.
Source : online.wsj.com
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