New Delhi: India’s iron ore industry said on 6 July that a duty on exports imposed in February and a strong rupee had dragged down sales, but steelmakers disagreed and again sought a cap on overseas shipments.
The government initially set an export duty of Rs300 ($7.40) per tonne of all iron ore, but later cut the rate applicable to low-grade sales to Rs50 following protests by the mining industry.
The Federation of Indian Mineral Industries said April-May exports had dropped by 2% to 16.41 million tonnes from 16.75 million tonnes in the same period last year, despite China’s roaring appetite for iron ore.
“Despite strong demand from China, the appreciation in the value of rupee and the export duty has not allowed us to take the full advantage,” R.K. Sharma, the federation’s secretary general, told Reuters.
The Indian rupee hit a nine-year high of 40.28 to a dollar in late May and has only slightly weakened since, raising concern among many exporters.
Sharma said demand was so hot that ore exports could have surged by 25-30% in May from a year ago, but the duty and rupee value had sharply pegged back growth.
Iron ore exports from the key coastal state of Goa fell by 14% to 6.3 million tonnes during April-May from 7.4 million tonnes last year, Glenn Kalvampara, joint secretary of the Goa Mineral Ore Exporters Association, said.
The export duty was imposed in the federal budget in February after India’s rapidly-expanding steel industry requested curbs on exports to ensure supplies of raw material.
“Our information is there has been no adverse impact at all on the export of iron ore as a result of imposing the export duty,” said Moosa Raza, president, Indian Steel Alliance.
“We, the steel industry, are continuing to plead with the government to impose a cap on export of iron ore, pegged to the 2006 export level,” he said.
Eighty percent of India’s ore exports are of low-grade fines, a powdery material.
The rising rupee has robbed India of a major competitive edge, the trade says, reducing its geographical freight advantage over rivals like Brazil for exports to China.
In 2006-07, India’s iron ore exports are estimated at about 90 million tonnes, more than half of which will go to China. India is the third-largest supplier of iron ore to China after Australia and Brazil.