The Hindu Business Line : Govt may revisit iron ore export tax next month

New Delhi April 25 The Government is examining the possibility of altering the Budget proposal for an export tax of Rs 300 per tonne of iron ore. The move follows a communication from the Ministry of Mines seeking a review of the proposed impost.

The Finance Ministry has collected a lot of data from the Ministries of Mines, Steel and Industry and Commerce as well as from industry bodies. A decision is expected in the first week of May before the Finance Bill goes for voting in Parliament.

Introduction of the export duty led to hectic lobbying by the iron ore mining industry seeking relief on the grounds that the move would render iron ore mining uneconomical.

Simultaneously, the domestic steel industry came out in support of the duty, stating that the move would help in the conservation of natural resources.

The Ministry of Mines and the Ministry of Steel too had made public their standpoints. The Mines Ministry has sought a comprehensive review of the proposal while the Ministry of Steel's stand is that export could be permitted only after ensuring that India does not become a net importer in the future.

Meanwhile, another middle formula doing the rounds within the Government suggests that lower grades of iron ore may be exempted from the new export tax. The Hoda Committee, which went into the issue of iron ore exports, is also understood to have suggested curbs on high-grade ores only.

Thus, according to sources, some relief could be extended to the export of iron ore mined in the Goa region, which has around 52-53 per cent iron content.

The other grades containing 30-32 per cent too may come under exemption, though export of this variety is almost negligible.

Stocks hit

Following the imposition of the export duty, stock prices of companies engaged in iron ore exports had taken a hit in the market.

Incidentally, the valuation of the largest private-sector iron ore exporting company, Sesa Goa, had seen a dip following the Budget proposal of an export duty. However, the company's stock recovered marginally later, following a number of bidders expressing interest to buy out Japan-based Mitsui's 51 per cent stake in the company.

On Tuesday, Vedanta Resources acquired 51 per cent stake in Sesa Goa for $981 million.

Vedanta's deal prices Sesa Goa shares at Rs 2,036 per share, a premium over Monday's closing price of Rs 1,742 on the Bombay Stock Exchange.

The initial bids from the suitors were in the region of Rs 2,200 to Rs 2,500 per share.

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