Pellet makers seek total ban on high grade iron ore exports

6 November 2017

Flagging concerns on the rising trend in iron ore exports, pellet manufacturers have called for a total ban on exports of high grade iron ore fines from the country in the interest of the local steel industry. They feel high grade iron ore is a scarce resource that needs to be conserved for value addition.

Pellet makers who are forced to operate at depleted capacity, are also pitching for 30 per cent export tax on lower grade fines (iron content of 45 to 58 per cent). The Union government has exempted export duty for low grade iron ore fines (iron content below 58 per cent) while continuing with the 30 per cent duty on high grade iron ore.

Federation of Indian Mineral Industries (Fimi) has been lobbying for a cut in export duty on higher grade iron ore. To study the possibility of rationalisation in export duty, the Union mines ministry has formed a committee.

But, Pellet Manufacturers Association of India (PMAI) is opposed to any move to prune or abolish export duty on iron ore.

“Iron ore is national wealth and needs to be preserved for the future especially when the country is eyeing 300 million tonnes steel capacity (by 2030-31). If there is glut of low grade iron ore fines, the same can be made available to pellet plants at a nominal cost. We feel that the cut off for export duty should be iron ore fines with 45 per cent instead of 58 per cent grade iron ore”, said Deepak Bhatnagar, secretary general with the Pellet Manufacturers Association of India (PMAI).

Justifying the export duty demand for 45-58 per cent grade fines, he said, Institute for Minerals and Materials Technology (IMMT), Bhubaneswar is working on new technology that can beneficiate even 45 per cent grade iron ore fines.

Leading steel and pellet manufacturer Jindal Steel & Power Ltd (JSPL) feels ban on high grade iron ore fines exports would increase its availability in the domestic market as such ore is in high demand by steel units.

Manish Kharbanda, executive director & group head (corporate affairs), JSPL said, “In any case, exports on raw material should never be encouraged since the value to the same resource can be increased exponentially by value addition which does not cost as much. Even smaller countries in Africa do not allow export of raw material like iron ore and have laws which encourage industrialization and export of finished products.”

Unlike top iron ore exporting nations like Australia and Brazil, India has a large steel making capacity that needs to be backed by ample iron ore supplies. India is the third largest steel producer with a rated capacity of 125 million tonnes (mt). Actual steel output in the country in FY17 was 97.4 mt, consuming 155.78 mt of iron ore against a total ore production of 190 mt. The country’s iron ore exports jumped four fold to 24.35 mt in FY17 on strong global prices.

By 2030-31 when the country targets steel capacity of 300 mt, iron ore requirement is projected to climb to 437 mt.

The domestic pellet industry tasked with value addition has a capacity of 85 mt created with an investment of Rs 40,000 crore. However, actual output was only 48.5 mt in last fiscal.

“Capacity utilisation (of pellet plants) can be significantly increased if the raw material is available at competitive price. Domestic market is oversupplied with lump and pellet since the steel makers are not able to produce at their installed capacity for multifaceted reasons including the market challenges. Export of pellets should help the pellet manufacturers to stabilize their operation, attain rated capacity and thus reduce per tonne cost of manufacturing”, Kharbanda said.

Source: Business Standard