India's steel ministry wants a new policy on iron ore that will turn India from an exporting country into one shipping value-added items.
As a first step, the ministry wants to raise the tax on ore export.
In an interview to The Telegraph, steel minister Virbhadra Singh said, “We are a major producer of iron ore, much of which we export at low prices. We should rather work towards a policy of encouraging value-added exports which fetch us better revenues.
“I have proposed that we increase the tax on iron ore export from the current low of 5 per cent,” he said.
The minister, however, refused to set a target tax.
Brazil, the other major producer of high-grade iron ore, had recently said that it was considering imposing a tax on export.
Last year, Indian officials had demanded a hefty lump sum tax on iron ore fines and a 15 per cent ad valorem duty on iron lump export.
Ministry officials argue that India should follow a policy similar to that of China, which does not allow the export of high quality coking coal.
According to the officials, the government should gradually phase out the export of high-grade ore, which should be reserved for domestic steel makers.
Singh, a former chief minister of Himachal Pradesh and known for his views on protecting the environment, said, “We need to conserve resources and mines scientifically and minimise environmental damage.”
Steel makers support the ministry’s argument as they need more ore to expand their capacity to 85 million tonnes by 2011.
Iron ore miners, on the other hand, have come out with figures to prove that the reserves in India are sufficient to meet the demands of the steel industry as well as the overseas market.
Experts, both within and outside the government, however, feel that India needs to revise its export policy for raw materials.
Advisers in the Planning Commission had earlier suggested that instead of selling iron ore at cheap prices, the scarce raw material should be bartered for equally scarce coking coal.
On his efforts to push the new policy, Singh said, “I have encouraged NMDC, which is a miner, to set up its own steel plant and add value to its output. SAIL is trying to turn its fines into sinter and use it in its own steel plants instead of selling it.”
India’s per head steel consumption is about 35kg, which is expected to increase to 300 kg by 2020. Policy-makers say any long-term strategy should take future consumption into account.
The Prime Minister’s Office is believed to be planning a compromise formula on iron ore that can cap export at a specified level, instead of a total ban.
India produces 155 million tonnes of iron ore annually, of which 89mt is exported, mostly to China.
Source: Calcutta Telegraph
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