BHUBANESWAR: A slump in the market coupled with rise in duty on export of iron ore has adversely affected auction of four mineral blocks in Odisha for which the State government issued notice inviting tenders (NIT) in March this year.
The Directorate of Mines had floated NIT for grant of mining lease (ML) of two iron ore blocks and as many composite blocks of iron ore and manganese in Sundargarh district on March 29. It had fixed May 18 as the date of opening of technical bids. The Directorate had issued another notice on June 8 deferring the auction process without assigning any reason.
While the Minister of Steel and Mines and the department’s Secretary did not respond to calls, informed sources said 40 per cent reduction in lifting and higher imposition of export duty on iron ore forced the government to defer the auction over fears of tepid response from bidders with less premium.
To rein in prices and increase local availability of iron ore and a few steel intermediates, the Finance Ministry on May 21 increased export duty on iron ore and concentrates from 30 per cent to 50 per cent. In the case of iron ore pellets, which was free from export duty, the Ministry slapped 45 per cent tax.
The ‘virtual ban’ on iron ore export directly impacted the domestic market with a steep fall in ore prices. The prices of different grades of ore were down by 40 to 50 per cent. “High-grade iron ore (62 Fe grade and above) that was sold for over Rs 8,000 per tonne in June last year crashed to around Rs 5,000 per tonne. The prices of high grade fines came down from Rs 7,400 per tonne to Rs 3,400 only. Similarly, the price of low-grade iron ore nose-dived to Rs 900 per tonne compared to Rs 1,800 per tonne last year,” said secretary of Eastern Zone Mining Association Prabodh Mohanty.
Imposition of higher duty has led to low production of ore across the country with Odisha being the major producer. With a total production of 155 lakh tonne from April to August, the country recorded a negative growth of 19.3 per cent. “We in EZMA have represented the Centre through Federation of Mining Industries (FIMI) to do away with the export duty. The Ministry of Mines recently convened a meeting with representatives of FIMI and steel industries and assured it will take up the issue with the Finance Ministry,” Mohanty said.
Stating that October-March is a ‘golden period’ for mining activities, Mohanty said industries are eagerly waiting for an decision in this regard by the Finance Ministry as early as possible.