As bauxite loses traction, Fimi seeks waiver of 15% duty on exports

Topics Bauxite | FIMI

Photo: Bloomberg
As exports of non-plant grade bauxite from the country are losing traction in the international market, Federation of Indian Mineral Industries (Fimi) has sought exemption of 15 per cent duty levied on export shipments.

Indian bauxite was losing edge in seaborne trade due to the high duty. By contrast, Australia, Brazil and Malaysia were dominant players since they levied no duty while another leading producer-cum-exporter Guinea imposed a measly duty of 0.75 per cent on bauxite exports. 

The mineral lobby body has appealed to the Union finance ministry to exempt bauxite exports from duties. This intervention by the government will help scale up exports of non-plant grade bauxite which has no applications in the domestic market and also bolster foreign exchange earnings, Fimi reasoned.

"Considering that low-grade bauxite (non-plant grade bauxite) is unsuitable and uneconomical for the consumption of the domestic aluminium industry and with a view to have optimum utilisation of our low-grade mineral resources, we request that the export duty imposed at the rate of 15 per cent on exports of bauxite may kindly be withdrawn completely. Since from the last week of May 2020 there would be high current in the Arabian Sea due to which it may not be possible to ship the exports consignment of bauxite from ports like Porbandar and Okha, we would be grateful for your early and favourable decision in this regard”, R K Sharma, secretary-general, Fimi said in his letter to Union finance minister Nirmala Sitharaman.

Historically, China has been the key market for India’s outbound bauxite shipments. However, due to the prevailing 15 per cent duty, the landed cost of Indian bauxite in China outstrips the cost of ore imported from countries like Indonesia, Malaysia and Guinea. Resultantly, exporters from the country have lost their market share in China to their counterparts in Indonesia, Australia and Guinea who offer superior quality of bauxite than the exporters from India’s western coast.

"Effectively, exporting the sub-par non-plant grade bauxite from India's west coast leads to generating direct and indirect employment to more than 50,000 labourers, principally In the Jamnagar- Porbandar region of Gujarat, and also leads to the vibrant economic ecosystem for local communities, stevedores and other related ancillary industry. However, one of the greatest concerns of the small bauxite producing mine owners is the highest incidence of export duty (15 per cent) being charged on export of bauxite including non-plant-grade (NPG) bauxite”, said Sharma.

Over the years, India fiercely competed with other bauxite exporting countries such as Australia, Guinea, Indonesia, and Malaysia for the bauxite export market-share. However, the debilitating 15 per cent export duty on bauxite exports has made exports of bauxite unviable. The quantum of exports of bauxite which peaked to 8.91 million tonnes in the year 2015-16, sharply declined to meagre 0.50 million tonnes during the year 2019-20 (April-January)

All of India’s alumina and aluminium producers have their own captive mines or meet their requirement from mines located in eastern and central India, which contain plant grade bauxite. On the other hand, the bauxite deposits occurring In India’s west coast (low in alumina content 38-45 per cent and high in silica content of above 7 per cent) are technically not suitable and economically unviable for the Indian refiners and smelters. However, such non-plant grade bauxite is accepted in certain countries on account of the paucity of bauxite and availability of technology for using low-grade bauxite.



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel