Government likely to raise export duty on iron ore by 20 per cent

Bowing to pressure from the steel industry to curb excess exports of iron ore in order to meet local demand, the government is planning to raise the export tax of the mineral required to make steel by as much as 20 per cent.

The decision of seeking to raise the export tax came after a meeting attended by officials from the finance, mines and commerce ministries met yesterday after iron ore prices hitting a record high that led to steel makers increasing the price of steel by nearly Rs6,000 a tonne over the last two months.

Steel makers like state-owned Steel Authority of India and private manufacturers Tata Steel, JSW Steel, Ispat Industries and secondary steel maker Uttam Galva have all hiked prices of steel due to global price increase in iron ore, coke and ferrous alloys-the ingredients that goes into the making of steel.

But the biggest rise has been in iron ore, where 63 per cent Indian fine had been selling in the spot market for $186 per tonne in mid-April and reached a record high of $192 per tonne on 22 April 2010, according to the Metal Bulletin.

A dramatic price rise of nearly $60 a tonne from the spot market price of $131.20 a tonne for Indian ore during the first week of January 2010.

The government is now planning to impose a uniform 20 per cent hike in export tax on iron ore, which the steel industry has been asking for since late January 2010. (See: Steel ministry wants 20 per cent duty on iron ore to curb exports)