Iron Ore Exports From India Seen Plunging on Taxes, Mining BanAbhishek Shanker
Iron ore shipments from India are poised to tumble for a fourth year as government curbs on mining reduce supplies and higher export taxes prompt buyers to secure the steelmaking raw material from other producers.
Exports will probably fall by about 50 percent in the 12 months through March from 18 million metric tons a year earlier, said Hukam Chand Daga, president of the Federation of Indian Mineral Industries. A tax of 30 percent and waning availability have made exports almost unprofitable, he said.
Shipments to countries, including China, India’s biggest buyer, plunged after mining and transport in the western state of Goa, the top producer, was stalled by the nation’s Supreme Court in October last year pending probe into violations of norms. There was no case to lower taxes on exports, Finance Minister Palaniappan Chidambaram said on Sept. 27, two months after Prime Minister Manmohan Singh said the government was trying to remove constraints in shipments.
“High taxes and railway freight coupled with court-ordered bans on mining have cut output and made us unviable in the international market,” said Daga, who is also an adviser to Essel Mining & Industries Ltd., an ore producer owned billionaire Kumar Mangalam Birla. “With tax cuts, the shipments could have crossed last year’s figure.”
India is considering reducing taxes on some exports to boost shipments and help reverse a decline in the local currency, two government officials with direct knowledge of the matter said last month. Taxes on exports of low-grade fines may be cut to 20 percent from 30 percent, they said.
The rupee has rebounded 9.8 percent from a record low of 68.845 per dollar touched Aug. 28 after the U.S. Federal Reserve said Sept. 18 it will continue $85 billion a month of bond purchases.