India’s Miners, Steelmakers Concerned About Export Duty Increase
- May 25, 2022
- Posted by: Quatro Strategies
- Category: Mining
The Federation of Indian Mineral Industries (FIMI) said the Indian Government’s decision to increase export taxes on iron ore will lead to large surpluses at home, mainly hitting producers of low grade ores that depend on overseas markets.
The government announced over the last weekend that export tariffs on new iron ores and concentrates would be raised to 50% from 30%, and duties on pellets would be increased to 45% from zero. The government also announced the removal of tariffs on coking coal and coke.
After the government’s announcement, benchmark iron ore futures in China, the world’s top consumer, rose about 7% on Monday, making their biggest leap in two and a half months. India is one of China major suppliers of iron ore.
The Indian mining industry group argues that the government’s decision will result in a lot of stockpiling.
Production by global mining giants including BHP, Rio Tinto and Fortescue in Australia has been disrupted because of supply chain problems and pandemic induced labor shortages. Meanwhile, Brazil’s Vale has had to deal with weather problems.
India also raised export tax by 15% on eight steel intermediates and scrapped import duty on coking coal, shortages of which have been driving up steel prices.
Indian Steel Association warned that the new export duty on steel products will adversely impact mills that have been aiming to boost exports and widen global market share following Russia’s invasion of Ukraine.
India is the world’s second biggest crude steel producer. The country’s output was a record 120 million tonnes in the fiscal year that ended in March.
ArcelorMittal Nippon Steel India says the decision will have negative impacts on new investment. The company calculates that the decision to raise the steel export tax would hit its 90,000 tonnes of steel exports every month.
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