Ban iron ore exports, impose 40% mining rent tax'
The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has sought a complete ban on exports of iron ore, having more than 60 per cent iron content in it adding that 40 per cent resource rent tax uniformity be imposed across mining sector to check windfall profits made by iron ore minors in case the former cannot be considered.
In a communication addressed to Prime Minister Dr. Manmohan Singh, the ASSOCHAM said that in spite of initiatives of UPA government for imposing an export duty on iron ore, it has not been able to reduce exports of iron ore.
Chinese government which happens to be the largest importer of Indian iron ore has been continuously increasing export tax on commodities like coal, coke and steel products in order to conserve it’s raw material.
It has pointed out that Australia, the 2nd largest Global Iron ore exporting country, has recently planned to levy a 40 per cent Resource Rent Tax uniformly across the mining sector to check the windfall profits made by iron ore miners. India should follow similar practices if it cannot impose a complete ban on exports of iron ore having more than 60 per cent iron content in it.
ASSOCHAM, therefore, strongly recommends that government should impose a complete ban on iron ore exports since, domestic steel industry is again in the spot light where infrastructure, real estate and automobiles will continue to play a decisive role in India’s growth. The chamber has observed that windfall profits that are being reaped by a handful of private minors would have far reaching consequences that may go beyond mere profiteering. ASSOCHAM has always maintained that such abnormally high profits not only impact development of any particular industry but has it’s fallout in the political stability of some of the states.
The private iron ore minors, that are making a windfall profit through iron ore exports have created a myth that iron ore fines are laying in excess in India as Indian Steel Industry is not equipped to use the same.
However, it is a total distortion of facts as most of the integrated steel plants using sinter and pellets use iron ore fines extensively which results in increased efficiency of iron making process.
It should be observed that China has been very judicious in controlling it’s natural resources through quantitative measures on steel making raw-material with a 40 per cent export tax on export of coke, thereby crating a shortage of coke in global market. It has pushed the prices by almost 200 per cent in last one year and spells the Chinese ambition of gaining undivided control of world steel industry.
The ASSOCHAM is of the view that India has just started its infrastructure development and would require huge steel in next 10-15 years. Therefore, adequate steps should be taken right now to make Indian Steel Industry more competitive in order to meet these challenges.
The chamber has also pointed out that the recent rise in cost of raw materials is challenging viability of entire Indian Steel Industry. Iron ore exports from India remain robust and in an excess of 100 Mnt per annum. This constitutes a whooping 50 per cent of the total iron ore production of the country. On the back of the windfall profits, iron ore exports have increased from 32 million tons in the year 2000 to around 100 million tons in the last fiscal.