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Move to export through MMTC

In a move that the iron ore mining industry said is a throwback to inspector raj, the commerce and industry ministry has moved a cabinet note proposing that exports of iron ore with over 55% ferrous content be canalised through the state owned trading company MMTC Ltd.

MMTC will get around 1% of the value of exports as commission.

Of the total domestic output of 220 million tonnes of iron ore, Indian miners export 115 million tonnes on their own and doubt if MMTC has the capability to handle such huge quantities. They have told the mining ministry that their right to export should not be usurped. Making MMTC the sole canalising agency will encourage middlemen and brokers in the business, they argued. Further, they fear junior level executives at MMTC may sit on orders and not clear consignments on time.

The mines ministry has already raised these concerns with the department of commerce and sought a meeting with MMTC to understand if it is indeed equipped to handle such large transactions. Big miners such as Sesa Goa have aired their apprehensions with the mines ministry. A mines ministry official said that “We oppose the proposal adding that the move would foster corruption.

When contacted, commerce department officials said this was an interim measure to ensure that iron ore exports continue while the government gets to keep a tab on illegal mining. At present, the Supreme Court has banned iron ore exports from Karnataka only. A commerce department official said that “Moreover, canalising exports of iron ore with ferrous content of over 55 per cent means that only about 35 million tonnes will go through MMTC.”

Earlier, a similar demand of the commerce department was opposed by the finance ministry, which had pitched for fiscal measures. It said duties would not only discourage illegal mining and exports but also enrich the government’s coffers. It had then hiked the export duty on iron ore from 20% to 30% a move that ate into the profits of the miners, but brought INR 9,000 crore more to the exchequer. But mines ministry officials said the hike in duty reduced the profit margins of miners, but did nothing to curb illegal mining.

When contacted, the Federation of Indian Mineral Industries the apex body of the miners, said the menace of illegal mining was due to middlemen and brokers. FIMI Secretary General Mr RK Sharma told The Indian Express that “They should be weeded out and only the miners should be allowed to export.” The federation has also written to the commerce and mines ministries opposing the canalisation move, he said.