While the Indian mining industry has welcomed the abolition of export duty on chrome ore, the ferro chrome industry has strongly objected the move. It fears that the decision may lead to price rise and further scarcity of the raw material in the country.
The Indian ferro chrome and stainless steel manufacturers have strongly resisted the government decision to abolish export duty on chrome ore from 30% earlier. They apprehend that zero export duty may lead to rise in export which will put pressure on domestic prices of chrome ore. Some manufacturers see the step against the interest of the domestic industry, which is facing difficulty in sourcing the raw material at the right price.
Due to high export duty, chrome ore export from India has been dropping in the last few years. While India exported 60,000 tonnes of chrome ore in 2014-15, it has come down to 25,000 tonnes till December in FY16. But abolition of export duty may lead to increase in exports from the country. After the abolition of export duty, MMTC, the Indian government owned external trading agency floated tenders for export of about 70,000 tonnes of chrome ore. So the trend suggests that the export graph will go north in the coming months. In FY16 (till Dec) India imported 218,000 tonnes of chrome ore, which was 265,049 tonnes in FY15.
“While the government is focusing on ‘Make in India’, abolition of export duty on low grade iron ore and chrome ore is a contradictory step,” said Mr SubhrakantPanda, Chairman, IMFA, a leading Indian ferro chrome maker.Similarly, Ranjan Mishra, Executive Director of Visa Steel said that “India has 1.75 mnt paferro chrome capacity for which about 3.5 mnt of chrome ore is required. Currently the ferrochrome plants in India are running at 55% capacity utilization due tolimited availability of the ore. Reduction of export duty in such a scenario will put pressure on domestic price and availability of chrome ore.”
“Recent reductions in chrome ore prices are not commensurate with fall in domestic and international ferro chrome prices. Also, removal of export tax on chrome oremaylead to exports of the precious ore, resulting in unavailability of ore for domestic consumers, increase in prices of ore in domestic market and will benefitcountries like China,” said R Ganesh, Director, JSL.
In February, few weeks before the Union Budget, Indian mineral based industries under the banner of FIMI (Federation of Indian Mineral based Industries) had urged the union steel and mines ministry to abolish 30% export duty on chrome ore and impose safeguard duty of 50% on chrome ore imports in view of surging imports.
Odisha accounts for India’s 98% chrome ore reserve and government owned miner OMC, Tata Steel, BC Mohanty are the major merchant miners of chrome ore. On the other hand, ferro chrome producers like IMFA, FACOR, JSL have captive mines in Odisha. Stand alone ferro chrome makers like Visa Steel, Navbharat Ferro Alloys, Rohit Ferrotech (plants in Odisha and West Bengal), Aarti Steel and other ferro chrome producers throughout the country depend upon the merchant miners (mainly OMC) for the raw material.
Odisha government owned miner OMC sells chrome ore to Odisha based ferro chrome producers through long term linkage policy. It also sells chrome ore through e-auction to the buyers in the country. Tata Steel also sells chrome ore in the open market.
Chrome prices in the domestic market have remained under pressure in the last few months. Lower demand had forced OMC to sell chrome ore at base price in the February round of e- auction.
Source : Steel 360 Magazine (April Issue)