New Delhi: A new mining policy approved by a group of Indian ministers on Friday does not contain a provision to limit iron ore exports, the mines minister said, in a rebuff to steel firms seeking restrictions.
“We have not proposed any cap on iron ore exports, exports would be freely allowed,” Sis Ram Ola told reporters after the ministerial group’s meeting.
The new mining policy, which must now be passed by the cabinet, is expected to ease rules governing the surveying, prospecting and leasing of mines, including to foreign firms.
Steelmakers have been demanding ore exports -- much of which go to China -- be capped at around 2006 levels to safeguard supplies for local users.
They argued that an export duty imposed on all ores in February’s federal budget, but then partially rolled back, had failed to deter overseas sales.
Iron ore officials, however, told Reuters that a rising rupee and the duty had combined to drag down exports, preventing Indian miners from making the most of soaring Chinese demand.
The government initially set an export duty of Rs 300 ($7.40) per tonne of all iron ores, but later cut the rate applicable to low-grade sales to Rs 50 following protests by the mining industry.
The Federation of Indian Mineral Industries said April-May exports had dropped by two percent 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.
Red hot China: 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 to 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.
Steel firms told a different story.
“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 of 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.
But with the ministerial group not proposing a cap on such sales, no change is expected soon, industry officials say.
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.