The demand by India’s iron ore mining companies for reduction in the export duty on the raw material has taken its toll.
In October and November, reports claimed, no iron ore was exported from India. None. While the main reason was the export tax, the other was the global price slump.
A report in LiveMint quoted R.K. Sharma, Secretary General of the Federation of Indian Mineral Indus (a lobbying group) said “(we) didn’t sell a single gram (of iron ore) overseas in these 2 months.”
As oft-reported by MetalMiner, Indian miners have sought to scrap the 30% export tax levied in 2011. What has worsened their situation is the current fall in international prices, which actually makes export of ore a loss-making proposition.
While the miners were somehow able to bear the tax when prices were in the region of $135 a metric ton about a year ago, the drop in price by almost 50% had made the levy like deadweight around the neck of the exporters. Even Sesa Sterlite Ltd., once India’s biggest iron ore exporters, has consistently demanded that the Indian government scrap the tax.
On the other hand, India’s iron ore imports went up dramatically to a record 6.76 million tons in the first 7 months of the current 2014-15 fiscal. India used to be the third-largest supplier of iron ore to the world, but, because of the export duty and the mining ban, it has turned into an importer.
On the heels of the export slump came the news that Tata Steel, a global steel major, had to – for the first time in its more than 100 year history – buy the raw material from abroad.
A report in The Economic Times said the steel conglomerate was operating its 9.7 million ton-a-year facility in Jamshedpur with raw material bought from domestic sources, besides imports.
Tata had purchased 2.3 million tons of iron ore to run its lone steel-making facility in the country. The ore had been purchased from the state-run National Mineral Development Corporation and miners in Australia.
Due to legal reasons, more than 40 mines in the provinces of Odisha and Jharkhand belonging to Steel Authority of India Ltd. (SAIL), Tata Steel, Odisha Mining Corporation, Essel Mining and others have all been shut down. Tata Steel’s mines in these 2 states have a combined iron ore production capacity of around 22 million tons a year. The company said once these mines resume operation, it would stop importing the ore.