PANJIM: Mine owners in Goa will have to wait till April 1, 2016, to avail of the zero per cent export duty announced in Monday’s Union Budget. There are nearly 13 million tonnes of iron ore – six million already e-auctioned and another seven million tonnes to be e-auctioned – slated for export.
The Union Budget on Monday abolished export duty on low grade iron ore, which stood at 10 per cent. In case of lumps the export duty, which was 30 per cent, was also withdrawn. With the slashing of export duty, the reduction in price of iron ore fines will be approximately Rs 150, while on lumps it would be Rs 450 per tonne of ore.
“Being a Budget announcement, it will be applicable from April 1. Exports taking place from April 1, 2016, will be exempted from payment of export duty,” Chief Minister Laxmikant Parsekar told Herald.
The State and mining companies now face a major challenge to export around 13 million tonnes of ore within three months, to ensure that fresh extraction of ore begins from October, the new season. The ongoing mining season will come to an end by May 31, with no export taking place during the monsoon.
The export of 13 million tonnes will also depend on the value of ore in the international market, especially China, which after a sluggish period for the last one year, has seen a rise in price by $40 per tonne of ore. Industry experts, however, predict that the price may drop further.
An analysis of the data, available on the website of Directorate of Mines and Geology (DMG), shows that nearly 85 per cent of e-auctioned ore is still lying at various sites. Of the total 7.24 million tonnes of e-auctioned ore in last two years, only 1.01 million tonnes of ore has been lifted from the site – 41.52 lakh tonnes (5.93%) exported to China and Japan while 60.23 lakh tonnes (8.60%) transported within the country.
In 2014, the first year of the e-auction process, exports were to the tune of 6.70 lakh tonnes of ore. This was when international prices began to fall. Six e-auctions were held in that year.
The market value showed a drastic decline reaching to as low as $20 per tonne in 2015, when nearly 20.44 lakh tonnes were exported to China. Eight e-auctions were held in 2015.
The year 2016 came as a kind of respite with mining companies exporting almost 12.37 lakh tonnes of ore in January and February. The international prices during this period had seen a sharp increase. Of the 12.37 lakh tonnes, 88,738 tonnes have been exported to Japan.
“Though international prices have shown a rise, there is possibility they will drop again. Many steel units in China have closed down and also there are countries like Australia supplying ore,” mine owner Harish Melvani said.
Meanwhile, the State government is yet to grant its green signal for holding the final phase of e-auction where 7.76 million tonnes of ore will be put up for sale. “Government has not yet intimated as when we can have the next e-auction,” Mines director Prasanna Acharya said.
As per the Supreme Court directives, mining companies cannot carry out fresh extraction of ore until all 15 million tonnes of e-auctioned ore are cleared from the sites. The upcoming State Budget which may reduce some State taxes on mining industry may give fresh extraction from the next season a further boost.
