KOLKATA (miningweekly.com) - After taking up cudgels on behalf of mining companies, India’s Mines Ministry has washed its hands of the issue of lowering export duty on iron-ore exports.

The Mines Ministry said in a communication that its primary mandate was overseeing production and governance of mineral resources of the country while fiscal issues pertaining to the sector, including the demand to lower the 30% export duty, fell within the ambit of the Commerce Ministry and the revenue department of the Finance Ministry.

This was a major setback for iron-ore miners and exporters who were lobbying for the lowering of export duty and establishing the Mines Ministry as the nodal agency to push the government for fiscal relaxation in view of falling iron-ore exports from the country.

The Federation of Indian Mineral Industries (FIMI) petitioned the Mines Ministry to lower the 30% export duty, as Indian iron-ore shipments were falling rapidly, with the country unable to match the competitiveness of shipments from Brazil and Australia.

FIMI also argued that the situation had been aggravated by the sharp fall in the iron-ore export price to below the $80/t mark, eroding margins of miner-exporters and traders, and warranting government support in the form of lower duty if Indian iron-ore exporters were to maintain a presence in overseas markets, particularly China.

FIMI claimed that about 62-million tonnes of iron-ore fines were lying idle at pitheads with local steel producers not equipped to use the grade of ore, and exporters unable to ship them overseas in view of the current low prices and negative margins after the levy of the export tax.

“There is an urgent need to eliminate the export duty, which represents an economic barrier to mining in the current low price environment for low-grade iron-ore and fines,” Vedanta Resources CEO Tom Albanese said in a recent statement.

Ministry officials, however, said that it preferred to stay away from any decision on the tax considering sharp conflicting demands from various segments of the iron and steel industry.

While miners were seeking lower duty, other segments like pellet manufacturers and steel producers were lobbying for the status quo, fearing a scarcity of raw material stemming from higher overseas shipments riding on lower tax.