The Indian government has proposed a ban on exports of iron ore to secure the country’s mineral wealth for its fast-growing domestic economy.
“It will be good to completely ban iron ore exports, as these are non-renewable resources,” said Atul Chaturvedi, secretary in the steel ministry.
“Once you exhaust them, you won’t get them [again].”
Rivalry with China has stirred a debate about resource protectionism in India. Questions have been asked about the wisdom of exporting resources, particularly iron ore to steel mills in China, which is the world’s biggest steel producer. India is the world’s fourth largest iron ore producer and also has deposits of coal, bauxite and chromite. About half of India’s 230m-tonne iron ore production is exported to China.
Officials have in the past tried to limit exports through punitive taxation or quotas. A ban would need approval in parliament, which is not assured, given India’s fragmented policymaking environment.
Stepping up the debate, Mr Chaturvedi said New Delhi should move beyond its current system of taxing iron exports and consider export bans for other resources, such as coal.
He has strong support from steelmakers. Chandra Shekhar Verma, the chairman of the Steel Authority of India, described the proposal as “very good”, as India needed to export value-added products rather than raw materials.
Mr Verma said India’s steel producers would need more iron ore in the coming decade as greater local consumption pushed them to double output to 150m tonnes a year.
But another industry executive called the export ban idea “bunkum”, as its effect on iron ore prices, India’s standing in the World Trade Organisation and the loss of jobs and tax revenues at home meant it could not be implemented.
“India produces 230m tonnes of iron ore a year and consumes about 103 tonnes. What do we do with what we mine but don’t consume?” the executive said. “This ban will never happen. It’s all posturing. This kind of talk has been going on year after year.”
Some, however, argue India should use its minerals to build much needed infrastructure at home.
The government is now preparing a new mining bill that will address resource security and seek to improve environmental protection compliance by mining companies. Rising coking coal prices have in particular prompted the government to put pressure on state-owned mining and steel companies to seek mineral assets abroad.
Virbhadra Singh, steel minister, said the Congress party-led government had an “open mind” about stronger “deterrence” measures to stem India’s exports of iron ore.
“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,” Mr Singh added.
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