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India is considering imposing an export tax on low-grade iron ore, following a request from small steel producers to restrict overseas sales. China is the main destination for Indian iron ore exports, accounting for over 90% of shipments. The demand for steel in India, the world's second-largest crude steel maker, has increased iron ore consumption in the country. Small steel producers have urged the Ministry of Steel to take measures to restrict exports and ensure sufficient local supplies at affordable rates.
The Ministry of Steel is examining the issue, including iron ore export data and the demands of small steel producers, to decide on whether to impose an export tax. India raised the export tax on low-grade iron ore lumps and fines, with iron content below 58%, to 50% from zero in May 2022, but later scrapped these taxes in November 2022 to allow duty-free exports of low-grade iron ore.
Indian iron ore exports reached 32.2 MMT during the first nine months of the current fiscal year, worth $2.7 bn, up from 9.5 Mn tonnes a year ago. India's steel demand is expected to remain strong, with the government anticipating economic growth to outpace the global economy in the next fiscal year.
The Federation of Indian Mineral Industries (FIMI), an industry body of mining firms, has requested the government not to curb iron ore exports, stating that India primarily exports low-grade iron ore, which is not widely consumed within the country. Small steel producers argue that they use low-grade iron ore, unlike large steel mills, and steady supplies at reasonable prices are essential for their relatively small profit margins.
India is expected to produce 330 Mn tonnes of iron ore in the fiscal year beginning April 2024, an 18% increase from an estimated 280 Mn tonnes this year, as more mines become operational.
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