Duty change to hit India's low-grade iron ore exports

By Biman Mukherji

NEW DELHI (Reuters) - Iron ore producers in Goa said on Monday their exports would be sharply hit by last week's duty changes, which a top exporter said would double taxes on sales of low-grade fines.

Late on Friday, the government changed the way it taxes overseas sales of iron ore fines, replacing a 15 percent value-based duty with a flat rate of 200 rupees ($4.1) per tonne, a move industry officials said could lead to closures.

But Glenn Kalvampara, secretary of the Goa Mineral Ore Exporters' Association, told Reuters the switch would amount to a 90 to 100 percent increase in export duty on fines, which make up nearly a third of Indian exports of iron ore.

"Instead of 110 rupees ($2.24), we will have to pay 200 rupees. So in effect it has increased the export duty by 90 to 100 percent," Kalvampara said.

"By even retaining the 15 percent duty there had been innumerable hardships for the mining operations in Goa. This amendment has worsened the plight of the already sinking low-grade producers to the extent of immediate shutdown," he added.

He said the duty change would hit all ore exports with an iron content of 52 to 58 percent. The government kept the export duty on iron ore lumps unchanged at 15 percent.

Domestic steel makers have been lobbying for an increase in iron ore export duty to ensure adequate supplies of the raw material.

Goa exports about 30 million tonnes annually, out of India's annual exports of 90 to 100 million. The bulk of its exports are of low-grade iron ore.