NEW DELHI (Reuters) - India is considering cutting the export duty for the low-quality iron ore produced by the country's biggest exporting state Goa, the mines and steel minister said, a move that could boost shipments to China and put more pressure on global prices.
The idea was welcomed by top private miner Sesa Sterlite Ltd, though some steel companies were critical.
Goa is expected to resume iron ore production by April after action against illegal mining kept the industry shut for over two years. The state has about 8 million tonnes of ore waiting at ports that has not got a buyer due to 30 percent duty.
Most Indian steel companies lack the technology to use Goa's iron ore, which has an iron content of less than 58 percent. Chinese companies buy that ore but multi-year-low prices have made higher quality ore more appealing.
This has prompted the mines and steel minister, Narendra Singh Tomar, to request that the finance minister implement a different duty structure for Goa.
"We've said that Goa's ore is different from the ore found elsewhere in the country," Tomar told reporters on Thursday. "The finance ministry should look at it differently. We can hope of something before the budget (on Feb. 28)."
But there would be no change for ore produced in other states until there is an abundance of ore for local steel firms.
India used to be the world's third-biggest iron ore supplier until court-imposed curbs from 2010 hit supply, swelling imports to a record 8 million tonnes last year, according to commodities consultancy OreTeam.
Sesa welcomed Tomar's recommendation and urged the government to completely withdraw the duty for Goa.
"A withdrawal of the duty will support the restart of the mining industry in Goa," said Aniruddha Joshi, a Sesa vice president.
Steel companies such as JSW Steel, however, say India should not export raw materials without adding value, and that they are investing in technology to use Goa's ore.
JSW and Jindal Steel and Power have also been struggling with rising steel shipments from countries like China and Russia, forcing them to seek government help.
"We'll surely find a solution of the problem of dumping soon," Tomar said. "We can't put a brake, so there is no other option (than raising the duty).
He did not say by how much the duty might be raised, a decision on which could come before the budget. Currently India imposes tariffs in the range of 5-7.5 percent.
Additional reporting by Aman Shah in Mumbai; Editing by Ed Davies