Duty cut may not boost iron ore exports
The cut in export duty for low grade iron ore to 10 per cent is expected to provide a slight relief to Goa-based miners, but experts say it is too little too late to revive exports from India.
Finance Minister Arun Jaitley has lowered the export duty on iron ore with 58 per cent iron content, while maintaining the duty at 30 per cent for higher grade ore. Typically, this kind of iron ore is found in Goa, which till 2009-10 was the largest exporter of the mineral from India.
Industry observers said the international prices of iron ore are so low that there might not be a market for Goa’s low grade iron ore.
“Today, due to overcapacity, mining giants like Vale, Rio Tinto and others are selling high grade ore (62 per cent iron content and higher) at $55-56 a tonne. The market for low-grade iron ore is diminishing internationally as the Chinese steel mills have reconfigured to use higher grade ore. Low grade iron ore is trading at less than $50 a tonne, which leaves little room to have good margins,” said a mining industry official.
Goa’s lower grade iron ore was primarily sold to Chinese mills at a time when 62 per cent iron ore was selling internationally at $177 a tonne, around four years ago. However, after India imposed an export duty of 30 per cent it lost out on market share to other countries.
RK Sharma, Secretary General of Federation of Indian Mineral Industries (FIMI) said that the increase in royalty last year, the contribution of Goa miners to the district mineral fund (10 per cent), and other regulatory costs leave little room for profitability.
Last year, the royalty miners of iron ore was increased to 15 per cent of the sales value from 10 per cent.
“With about 52 per cent going in duties and taxes, Goan miners are left with 48 per cent out of which transportation costs need to be paid. I doubt there will be any substantial export even after the duty cut,” said Sharma.
However, Goa-based companies like Vedanta Ltd welcomed the move for an export duty cut and saw it as a relief.
The company’s Chief Executive Officer of the Iron Ore Business, Kishor Kumar, said that the decision is a shot in the arm for the Goan iron ore industry.
Mumbai Port Trust felicitates key Port users
At a Trade Promotion Meet it organised here on Tuesday (April 28), Mumbai Port Trust (MbPT) felicitated 14 important Port users for their outstanding contribution to the traffic in MbPT. They included public sector as well as blue chip companies like BPCL, HPCL, ONGC, RCF, Volkswagen, Maruti Suzuki, Tata Power, Jindal Steel, Uttam Galva, and a few shipping agents. The function was attended by Port users, representatives from the shipping and logistics fraternity, besides various dignitaries from the state government, Central government and local authorities.
The awards were presented by Mr Ravi M. Parmar, IAS, Chairman of MbPT, Mr Yashodhan Wanage, IRS, Deputy Chairman and Mr D. Nayak, Traffic Manager.
Addressing the gathering, they highlighted the salient features of the Port, its plans for the future, its role in the export and import of key commodities, and its contribution to the growth of Mumbai city.
The Port management is contemplating commencing 24×7 operations soon, it was disclosed.
Mumbai Port achieved an all-time high traffic of 61.66 million tonnes (mt) in 2014-15, in its 141 years of chequered service to the great metropolis and, in particular, to the ex-im trade of India, it was highlighted. Against popular perception, the Port has been growing year-on-year and continues to retain its position as the 4th highest cargo handling facility among the Major Ports.
MbPT’s Indira Docks, a mainstay for general cargo, completed 100 years in 2014-15; and to cap this glorious year, it recorded traffic growth of over 28 per cent. Automobile exports increased by 42 per cent, iron and steel import by 61 per cent,and cruise liner traffic also grew substantially, it was emphasised.
Besides, in its endeavour to be more city-friendly, MbPT has launched a number of new initiatives, including cruise terminal development, fast ferry service, marina, floating restaurant, floatel, sea plane service, an MoU with MMB, passenger terminal upgradation, FSRU for LNG, restoration of Sassoon Dock Gate, among many more such projects.
This growth in traffic and the launch of new initiatives were possible only due to the patronage and faith of the trade and Port users on one hand, and the proactive support and cooperation of the state and Central governments and local authorities, Mr Parmar said.
It was after a very long time that Mumbai Port organised such an awards function, which Mr Parmar told Exim India was an initiative to thank and recognise the contribution of customers, shipping agents, CHAs, etc. towards the increased throughput of the Port. Representatives of the trade were appreciative of the Chairman for bringing this to fruition and also complimented his leadership skills and accessibility.
ArcelorMittal’s India sales hit by import policies, weak demand
Billionaire Lakshmi Mittal-led ArcelorMittal, the world’s largest steel producer, has seen a steady decline in its businesses in India as weak demand and import policies have hit sales, while investments in local firms and manufacturing plans have disappointed.
According to the firm’s 2014 annual report, ArcelorMittal and its subsidiaries reported sales of $225 million from India, down 74% from the $873 million reported in 2010.
To be sure, domestic steel firms have struggled with weak demand due to a slowdown in the investment cycle over the last couple of years and rising imports from markets such as China, Japan and South Korea. ArcelorMittal is no exception.
“In addition to this (weak demand), the rupee has depreciated more than 30% since 2010, which made imports more difficult. Further, that we have to pay more import duty that is 7.5% as against import from Free Trade Agreement (FTA) countries, who pay just 0.8%, has made competition much tougher in Indian market,” an ArcelorMittal spokesperson said in an email response, adding that realizations in India have been lower compared to other markets. The firm does not disclose margins across its India business.
ArcelorMittal’s businesses in India include a wholly-owned subsidiary called ArcelorMittal India Ltd and ArcelorMittal Distribution Solution India Pvt. Ltd.
This post was written by Atlantic Admin