Miners’ body FIMI today flayed industry chamber Assocham for its contention that higher export duty on iron ore has helped conservation of the raw material for steel industry, claiming the levy has actually caused huge loss to the economy.

“In fact, the export is antithesis to conservation and encourages to intense exploration and more resources,” Federation of Indian Mineral Industries (FIMI) said cautioning that this would result in imports and India may have to shell out $15 billion.

It said “the growth of mining sector of 5% in 2010-11 which contributed to 8.4% growth of GDP in 2010-11 has witnessed a negative growth of 0.9% in 2011-12 resulting in GDP growth of 5.3% in 2011-12.

Assocham last week had cautioned the government against renewed demand of mining industry for reviewing export duty structure on iron ore, saying it would have adverse impact on the steel sector.

It had said the “government must stay vigilant and not repeat the saga of illegal mining caused by unrestrained iron ore exports and interests of the steel industry should receive government’s attention.”

It said ore production may come down to less than 100 million tonnes in the current fiscal from 218.55 MT in 2009-10.

Quoting an international expert FIMI said: “The roughly 100 million tonnes of lost exports at the current average price of around $100 per tonne and another potential 30 MT of imports of higher quality of ore at around $140 per tonne will cost India $15 billion, money that goes straight in the pocket of foreign miners.”

FIMI alleged that the government bowed down under pressure from the Steel Ministry and had raised the export duty to 30%.

India’s iron ore exports more than halved to 15 million tonnes (MT) in April-November 2012 as against 40 MT in the corresponding period previous fiscal due to mining ban in some key producing states, curbs on shipments and higher duty and freight charges.

India is the third largest global exporter of the ore. The government had hiked the duty on exports to 30% in December 2011 after raising it to 20% in March.

Apart from the duty hike, the decline in exports of iron ore was due to a number of reasons, including the imposition of a ban on exports from Karnataka since July, 2010, following allegations of widespread illegal mining.

Production of iron ore in around 45 mines in Goa has also been shutdown due to environmental reasons. An informal export ban is also in place in Odisha.

Courtesy: Business Standard