Steel ministry seeks hike in ore duty.

New Delhi, March 30: The steel ministry is lobbying the government to impose an export duty of 20 per cent on iron ore to ensure adequate availability of ore for local steel makers who are targeting a big production hike to meet the demands of the economy that is expected to grow at over 8.5 per cent in 2010-11 and accelerate to 9 per cent the year after.

“Yes, steel minister Virbhadra Singh has written a letter to the Prime Minister seeking the imposition of a minimum 20 per cent ad valorem duty on all grades and varieties of iron ore to curb export,” a senior steel ministry official said.

The government had earlier raised the export duty on iron ore lumps to 10 per cent from 5 per cent and slapped a 5 per cent duty on fines at the end of December.

According to R.K. Sharma, secretary-general of the Federation of Indian Mineral Industries, the imposition of export duty on iron ore fines and the doubling of tax on overseas sales of iron ore lumps will make exports less competitive.

The ministry had sought the duty structure to be doubled in the budget for 2010-11, but the demand was not met. It had also written to finance minister Pranab Mukherjee earlier this month requesting the imposition of a flat 20 per cent duty on iron ore exports.

In the budget, Mukherjee had proposed to invest Rs 1.73 lakh crore in infrastructure, which is likely to boost the industry.

Industry sources said, “As the government targets 8-9 per cent GDP growth, steel manufacturing also needs to grow 9-10 per cent, which will be around 150-200 million tonnes in the next 10 years. So, India needs to conserve its iron ore reserves to support such growth.”

India is the third largest exporter of iron ore. Nearly 80 per cent of the exports go to China and the rest to South Korea and Japan.

Source : telegraphindia.com