New Delhi: Making a case for capping iron ore exports, steel makers have said export volumes of the mineral have been swelling and its prices increasing globally — threatening expansion plans of the domestic industry.
“Iron ore is a non-replenishable commodity. What do we do if it gets exhausted. All our expansion plans will put to hold if the country is forced to become the net importer of ore. We need to analyse what economic sense it makes for the nation to allow exporting of the mineral,” a source in the Indian Steel Alliance (ISA) told PTI.
“Iron ore exporters had already raised prices by $21 a tonne between January and May, which is an increase of 36.2%. Last month, ore exports from ports were 8.01MT as against 7.37MT in May 2006 amounting to a growth of 8.7%. This gives them a substantial growth in their topline despite rupee appreciation,” the source said.
Citing Indian Port Association (IPA) data, sources said total exports from ports were 7.37MT in April as against 7.02MT in April 2006 leading to a growth of 4.8%.
Miners, however, claim that exports have dipped 10% due to rupee appreciation, imposition of export duty and recent increase in freight charges.
“As per the data provided by Indian Ports Association, iron ore exports have increased and will continue to increase despite rupee appreciation, export duty and increase in freight charges,” ISA sources countered.
Sources said ore spot prices in January were $58 and this month they have already touched $79.
Pointing out that no other industry in the country generated profits like the iron ore sector, ISA sources said: “A classic example is the Q4 profit of NMDC. Being a PSU, if NMDC can yield an operating profit of over 90% and net profit of around 57%. One can easily guess the profitability of standalone unlisted private miners.”
Demanding a cap on iron ore exports, they said standalone iron ore mining does not require any substantial capital investment as in the case of steel plants.
Moreover, the state and central government exchequers do not get the revenue that is realised from the steel sector.
“One tonne of iron ore export gives the government Rs17 whereas one tonne of steel produced gives Rs4,300 as revenue which includes VAT, excise and the royalty.
Employment multiplier ratio between standalone mining vis-a-vis steel making is 1:20. This is the reason that you do not see any listed companies under the mining sector except companies like NMDC and Sesa Goa,” they pointed out.
Standalone mining not only leads to safety hazards but also paves way for poverty, child labour, naxal activities and other anti social elements, besides enabling few private mine-owners to accumulate personal wealth at the cost of economic growth and national interest, they contended.