Full story.India seeks ban on iron exportsBy James Lamont in New...

Full story.

India seeks ban on iron exports
By James Lamont in New Delhi

Published: July 13 2010 10:05 | Last updated: July 13 2010 10:05

The Indian government has proposed a ban on the export of iron ore to secure the country?s mineral wealth for the fast-growing domestic economy.

?It will be good to completely ban iron ore exports as these are non-renewable resources,? Atul Chaturvedi, secretary in the ministry of steel, said on Monday. ?Once you exhaust them, you won?t get them [again].?

Rivalry with China has stirred a debate about resource protectionism in India. Within India?s policymaking establishment questions have been asked about the wisdom of exporting mineral resources, particularly iron ore, to steel mills in neighbouring China, which is by far the world?s biggest steel-producing nation.

India is the fourth-largest iron ore producer in the world and has significant deposits of coal, bauxite and chromite. About half of India?s annual 220m-tonne iron ore output is exported to China.

Government officials previously pushed to limit mineral exports only through punitive taxation or quotas. A ban would require parliamentary approval, which is not assured given India?s fragmented policymaking environment.

Stepping up the debate, Mr Chaturvedi said New Delhi should move beyond the current system of taxing iron exports and consider export bans for other resources such as coal and oil.

Some say that India should be using its minerals to build badly needed infrastructure at home.

The government is preparing a new mining bill that will address resource security and seek to improve environmental protection compliance by mining companies. Rising coking coal prices in particular have prompted the government to put pressure on state-owned mining and steel companies to seek mineral assets abroad.

Iron ore prices have fallen over the past two months as Chinese steel mills have eased production. The price of Indian fine iron ore has fallen to $130 a tonne from $200 a tonne in April. China reportedly restricted imports of low-grade ore from India in April.

Virbhadra Singh, the steel minister, said the Congress party-led government had an ?open mind? over stronger ?deterrence? measures to stem India?s exports of iron ore to boost domestic availability.

?The government has taken a few policy measures to discourage avoidable exports of iron ore and consequently raise domestic availability by increasing the export duty on lump ores to 15 per cent and having a 5 per cent duty on [iron ore] fines,? Mr Singh said in May. ?Although this will have a marginal impact on exports, the government would have to look at the question differently by bringing in definitive deterrence. If need be, we will resort to taxation measures and quantitative restrictions to conserve the use of iron ore for today and for the future.?

Local mining companies include listed companies such as Sesa Goa, Sterlite, Tata Steel and the Steel Authority of India. Their number also includes less internationally known miners such as Obulapuram Mining and Anantapur Mining, owned by the Reddy political dynasty in Karnataka.