Tax brings down iron ore exports

India's apex mineral export body, Federation of Indian Mineral Industries, says the imposition of the Rs 300 per tonne export duty on iron ore has severely impacted the industry.

In a statement, FIMI said that exports from India might come down by 33 per cent in March because of the new duty that Finance Minister P Chidambaram had imposed.

FIMI said that China's decision to suspend ore imports from India had infact resulted in a 33 per cent decline in the month

India will export about 7.16 million tonne of ore this month compared to 10.57 million tonne in the same month last year.

"The duty coupled with the suspension of Indian ore imports by China, the single largest market for Indian ore, has impacted the industry drastically," FIMI senior vice-president Rahul Baldota told reporters.

He

said that the domestic mining industry was dependent on China for iron ore sales and the export duty would lead to the near shut down of mining operations and exploration activities in the country.

"Chinese companies have started buying ore from Brazil and Australia. These two countries are increasing ore export capacity by nearly 250 million tonne per annum just to cater to the increased demand," he said.

The mining body has argued that the Indian companies were left with no option but to export fine ore, which is generated during mining for lumps and forms a majority of domestic use.

"The industry has to extract nearly 2-2.5 tonne of fines before extracting one tonne of lump. The domestic industry does not have enough capacity to use these fines, leaving miners with no option but to export these fines," the FIMI statement said.