'Impose Rs 500 per ton cess to discourage iron ore exports'

New Delhi, Sep 25 (UNI) A cess of Rs 500 per tonne on iron ore exports will lead to a revenue generation of Rs 4,000-5,000 crore per annum for the government, Assocham said today while calling for deincentivisation of these exports.

''If an immediate ban on iron ore exports is not possible, then it should be done in a phased manner, and by 2015-16, the ban on iron ore exports should be effected. However, until then, a cess of Rs 500 per tonne is necessary to discourage iron ore exports and encourage revenue for the government,'' the Associated Chambers of Commerce and Industry (Assocham), said in paper on the subject.

The chamber feels that the imposition of a cess on iron ore exports will make its exports unattractive and in turn, encourage the investment by the mining industry.

In addition, with this move in place, it will increase the availability of iron ore for the second-level of a mini blast furnace and a sponge iron plant in the country, the chamber said adding that the generated revenue can be utilised for further exploration of the minerals.

More intensive regional exploration can be done by applying modern and expensive technology such as deep-imaging and electro-mangnetic probing, it said.

Also, part of revenue can be kept in a separate fund for development needs of the local, tribal and weaker sections in mining areas which should be used to promote the sustainable development of the backward classes and tribes areas. The fund can also be used for the development of health and hygienic, employment, audit literacy and education of women, etc.

According to the study, India has about 23.59 billion tonnes of iron ore scattered in states like Jharkhand, Orissa, Chattisgarh, Karnataka and Goa. Out of this only 6.311 billion tonne is proven reserve while the balance 17.27 billion tonnes are probable and possible reserves.

Out of total 23.58 billion tonne reserves, 12.906 billion tons are hematite ore and 10.68 billion tonnes are magnetite ore.

On the occurrence of magnetite ore, 75 per cent of the total reserves are found in the state of Karnataka and Goa, which is ecoglogically and environmentally sensitive.

The Supreme court has already banned the mining being done by the Kudremukh Iron Ore Co Ltd. About 13 per cent of the total reserves are found in the state of Andhra Pradesh, which is basically in reserve forest and tribal land.

Due to these reasons, steel industry has not been able to take the advantage of this huge magnetite reserves, revealed the study.

The study said India's steel production would be achieving a growth rate of at least 10 per cent for the coming years. With this growth rate, India would be producing around 75 million ton of steel by 2012 and 200 million tonnes of steel by 2020.

Iron ore production in 2005-06 was 165 million tonnes, out of which, 90 million tonnes were exported and 75 million tonnes were consumed domestically.

India is exporting more than 50 per cent of the iron ore production, and iron ore exports have grown at a much faster rate in comparison to the production itself. Exports of Iron ore have registered a CAGR of 18 per cent in the past. If continued at this level, the entire known reserves of high grade iron ore would be exhausted in less than 20 years.

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