Iron ore miners, steel firms tussle over export duty

India's largest iron ore miners and steelmakers have locked horns over a potential government move to impose an export duty on low-grade iron ore, with the former seeking free exports while the steel industry wants to discourage such shipments.

- Dipali Banka

The dispute pits miners such as Vedanta Ltd's Sesa Goa Iron Ore and Rungta Mines Ltd against steel titans such as JSW Steel Ltd and ArcelorMittal Nippon Steel India.

The government is considering a uniform export duty on all grades of iron ore, a policy move intended to lower raw material costs for domestic steel producers and boost India's manufacturing sector. A final decision could be announced as early as October, following monsoon season.

While high-grade iron ore currently attracts a 30% export duty, low-grade ores are exported duty-free.

Miners oppose the proposed duty, stating that domestic steelmakers lack the technology to process low-grade ore, a claim the latter rejects. A senior executive from a top mine exporter, who asked not to be named, said the duty would cause a revenue loss of close to ₹16,200 crore for the mining industry.

"China's steelmakers use low-grade iron ore because they have the technology to beneficiate it, whereas India's steel industry does not," the executive said. Beneficiation is the process of refining iron ore to higher quality which is suitable for steel production.

Queries emailed to steelmakers Tata Steel, JSW Steel, SAIL, AMNS India and miners Vedanta and Rungta remained unanswered.