High export duty denies Indian players edge in chrome ore trade
Asteep export duty of 30 per cent has made exports of low grade chrome ore and chrome concentrates unviable. This has led to African countries such as South Africa and Gabon stealing a march over India in seaborne chrome trade. Until a few years back, India was a significant player in chrome ore trade, especially chrome concentrates that fetched good premiums in the export market.
With exports no longer lucrative, the inventory of low grade chromite, which has no use in the domestic market, had piled up to 2.5 million tonnes at mine heads by the end of 2015-16. Low grade chromite has no direct use in the ferro chrome industry and, hence, gets accumulated. Besides, the infrastructure created to enrich it into chrome ore concentrates also lies underutilised due to a fragile demand.
While chrome ore exports are taxed at 30 per cent, there is no duty on ferrochrome where unhindered exports are happening. An industry source said: "There is a need to provide level-playing field to chrome concentrate producers and rationalise export duty on it, this will help utilisation of installed capacity, provide employment to local people besides spurring economic development of the area where low grade ore can be processed or beneficiated for exports. High grade ore which is a precious mineral exported in the guise of ferro-chrome must be restricted to safeguard domestic producers and the country's economic interests."
Mining lobby body Federation of Indian Mineral Industries (Fimi) is learnt to have written to the Ministry of Finance, pitching for removal of export duty on chrome ore in the Budget for 2018-19. "If export duty cannot be rationalised, the government should think of levying some import duty on chrome ore", said a Fimi official.
To boost mining and exports of chrome ore and chrome concentrates, the Union government in 2016-17 budget, waived off the 30 per cent export duty. However, the duty was reimposed again on May 26, 2016 purportedly due to pressure from the ferrochrome industry.
Ferro-chrome producers say chrome concentrates are already being used by the industry and the lower grade chrome ore (chromite content of 15-42 per cent) needs to beneficiated.
"We believe no raw material that is consumed by the domestic ferro alloys industry should be exported except for value added products. In case of chrome concentrates, which is a value added product and also used by the industry, we are of the view that there should be a cap on its exports", said J K Chatterjee, secretary general with the Indian Ferro Alloy Producers' Association (IFAPA).
The country's domestic consumption of chrome is in the range of 2.42.5 million tonnes. The ferro chrome producers use friable chrome ore and chrome concentrates in the ratio of 70:30. Production of one tonne of ferro chrome needs 2.4 tonnes of chrome ore/concentrates along with 3,8004,000 units of power. Around 70 per cent of the ferro chrome manufactured in the country is exported, mostly to China.