| Date: |
19-02-2015 |
| Subject: |
Budget 2015: Miners expect government to do away with 10% duty on export of ilmenite |
BHUBANESWAR: Producers of heavy minerals are hoping that the upcoming Union Budget will do away with the "arbitrary" 10% duty on the export of ilmenite, a mineral essential in the production of titanium dioxide.
Industry representatives such as Trimex Group claim that the duty introduced by the previous UPA government is hurting the heavy mineral industries and that their plea for revision has so far fallen on deaf ears - 5% duty also applies to beneficiated ilmenite. According to a senior government official, even the Department of Atomic Energy's India Rare Earth Ltd is feeling the pinch of this duty.
Ilmenite, found in beach sands, is primarily used to produce titanium dioxide, the white pigment that goes into a number of products from paper to the lustrous coat on consumer durables. In the past two and a half years, global prices of ilmenite have fallen sharply from $250 to $100 a tonne, but so have the demand as well as price of titanium dioxide.
"The duty serves absolutely no purpose. It is cheaper for them (titanium pigment manufacturers) to import ilmenite at current rates. Even IREL is now forced to export ilmenite at $103 a tonne," said Pradeep Koneru, executive director and CEO of Trimex Group, which has suffered erosion in its margins.
A third of IREL's revenues come from exports. "It is, after all, a central government company but having to pay an upfront 10% from its revenues affects IREL's profitability," said a government official, who did not wish to be named.
The company's largest unit of 2.20 lakh tonnes in Odisha's Chhatrapur produces ilmenite, but with 50% TiO2 content, which cannot be consumed by India's titanium pigment companies that are mostly based in Kerala.
With leases in Andhra Pradesh, Trimex is also dependent on exports for similar reasons. The company has invested Rs 580 crore in its existing heavy mineral separation plant. It had announced investments of Rs 2,000 crore in titanium slag and pigments in Andhra Pradesh, but it will be going slow on downstream ventures given the current market situation. The other major player is Tamil Nadu-based VV Minerals, which also has a titanium pigment plant in Tuticorin.
Domestic consumption of ilmenite has fallen from 2.37 lakh tonnes a year in 2008-09 to 1.19 lakh tonnes in 2013-14, according to Trimex.
An official of Cochin Minerals and Rutile, which produces the intermediary, synthetic rutile, said, "There is a reason the central government imposed duties - to encourage value addition within India. Our demand is yet to be met by the suppliers (IREL), who are only being able to supply 15-20% of their commitment."
The company's plant is running at 30% capacity, supported in part by imports from Mozambique. An official at IREL admitted it had local issues, but said that was two years ago and it was CMRL that was not picking up material. The Kerala units, such as CMRL, have been designed for the superior Kerala ore and cannot be fed the lower grade ilmenite from Odisha and Andhra Pradesh even if freight cost would permit it, he added.
Meanwhile, state-owned Kerala Minerals and Metals is pleading for import duty on the pigment to be doubled to 20% in the coming budget. It has also asked the government to raise a duty drawback of 1.3% to 2.5% to help it retain its competitiveness in the global market," said a company official.
With a 6,000 km coastline, India has some of the most promising deposits, accounting of 30% of globally known reserves, but accounts only for a 9% share in global production of the mineral. Earlier this month, IREL signed a joint venture with the Industrial Development Corporation of Odisha Limited (IDCOL) for a Rs 450 crore beach sand mining project which will include a mineral separation plant in Ganjam district.
Source : economictimes.indiatimes.com
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