While the export of pellets is detrimental to the national interest and Government is losing huge revenue directly due to such action, restrictions are needed to be imposed on export of iron ore pellets.
Odisha Sponge Iron Manufacturers’ association (OSIMA) has demanded such restrictions as the pellet manufactures are exporting pellets instead of supplying locally.
In a Memorandum to Union Minister Steel, Dharmendra Pradhan, OSIMA has requested for saving the Sponge Iron Industry, majority are in MSME Sector, which employs large number of workforces.
OSIMA has pointed out that there are 85 Sponge iron Plants in the State, 70 are in MSME Sector and there are more than 4000 Units in MSME sector engaged in Value Chain of manufacturing Steel like sponge iron, Induction Furnace and Rolling Mill spread all over the country producing almost 50 Percent of total steel production.
OSIMA has said the lapsing of 21 major iron ore producing mines in March, 2020 and subsequent non operation of mines by new allottees, although some of the whom have retained the mines and there is no impediment to their resuming mining operation have created unprecedented shortage of iron ore.
This shortage of sized iron ore could have been met by iron ore pellets. Unfortunately taking advantage of Policy Lacunae, the pellet manufacturers are exporting 12-15 Million tons of pellets annually instead of supplying locally thereby driving prices of iron ore lumps higher in a short supply situation.
It may be noted that 62 Percent Fe Iron ore fines presently is being quoted approximately $125 PMT and pellets having 63 Percent Fe is being exported at approximately $125-130 PMT.
As such it will not make any difference to foreign exchange whether fines or pellets are exported as they fetch almost same price.
In order to conserve natural resource for use in domestic industry, Government has levied 30 Percent Export Duty on iron ore exceeding 58 Percent Fe content. Pellet makers uses iron ore 1.05-1.10 Ton high grade fines for making 1 Ton of Pellets.
If fines are directly exported without beingconverted, Government will get 31.5-33 Percent of export sale as Export Duty resulting in loss of Export Duty of at least approximately Rs.3000 Crore annually.
Under this backdrop, OSIMA has requested Union Minister Steel that the Pellets are made locally available at competitive price.
Absence of Export Duty is encouraging export of pellets, which is resulting in creating shortage in the market and thereby not only driving lump ore prices higher but also creating scarcity of raw material for sponge Iron Industry, pointed out OSIMA.
Similar situation is in Chhattisgarh and West Bengal, pointed out a OSIMA Member for which CGSIMA and WBSIMA have also raised concern in this regard, said sources.
They have requested for immediate intervention of Ministry of Steel in this regard to save the Sponge Iron Industry