India needs to scrap export duty on iron ore in the face of sliding prices globally, especially on low grade that is exported from Goa to make mining a profitable proposition, Vedanta Resources said on Thursday.
“For the past few years the Goa mining sector has been shut down... The profitability is also being reversed as a consequence of rapid decline in global iron ore prices,” Vedanta Resources CEO Tom Albanese told the news agency.
He added: “Unfortunately in this environment where markets are low the Goa iron ore will not be very competitive. The export duty, which was placed by the government to capture some of the profits when prices were high, needs to be recalled.”
Albanese, who is also the CEO of Sesa Sterlite, a Vedanta subsidiary, said “ores that have been typically mined in Goa including that of Sesa have been of a lower grade than typically desired by the Indian steel sector” and is exported where global prices had already nosedived.
The Finance Ministry is likely to soon take a call on the demand for withdrawal of export duty on iron ore to encourage outbound shipments.
There is 30 per cent export duty on iron ore at present. As per industry experts the duty was imposed when prices of ore were sky-rocketing at $180-200 per tonne. They have plummeted to a 5 year low to $80 per tonne for best grades ‘63 Fe’. Iron ore grade produced in Goa is ‘58 Fe’ or below.
“Goan ore price (usually 58Fe or below) is at $50-55 per tonne. With 30 per cent export duty and present prices, iron ore mining in Goa is a loss making proposition,” said an industry official.