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Fact box - Indian iron ore exports

Hike in export duty on iron ore
In the first phase, duty was raised to a flat 20% ad valorem on lumps and fines, against 15% on lumps and 5% on fines. In the second phase, the duty was raised to 30% ad valorem on December 30.

Fall in exports
In 2010-11 of about 20 million tonnes was primarily because of the ban imposed by the Karnataka government in July 2010. But the drastic fall in exports in 2011-12 is directly attributable to the increase in export duty and railway freight rates. With a modest export of 50 million tonnes, export duty at 30% would surely not be a respectable revenue earner. Iron ore mining industry in India, paradoxically, is highly taxed, which has made it uncompetitive in the international market.

Expenses in exports
The industry spends 45% on logistics (39% being the rail freight); 10% on royalty; 30% on export duty and 10% on port-related charges.

Domestic availability
In 2010-11 the steel industry consumed 103.25 million tonnes of iron ore, against a production of 208 million tonnes. With pithead stock at the beginning of the year at 75 million tonnes, total availability of ore was 283 million tonnes. After export of 97.66 million tonnes, there was a comfortable stock of 82.09 million tonnes of ore within the country. In other words, there was no shortage of iron ore for the domestic steel industry.

Breakup of exports
Out of exports of 97.66 million tonnes in 2010-11, 89.84 million tonnes or 92% were fines. Lump ore accounted for only 7.82 million tonnes or 8%. Seventy four per cent of the lump ore was below 62% Fe, mostly from Goa. The balance of about 2 million tonnes lump ore was exported by NMDC under long term contracts with Japanese and South Korean steel companies.

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