The Indian iron ore pelletization industry has sought a reduction in excise duty to five percent from 12.5 percent at present in the forthcoming national budget later this week, in view of falling export prices, an official at the Pellet Manufacturers Association of India (PMAI) said on Wednesday, February 24.
The PMAI official said that, with export prices falling from an average of $162/mt to around $63/mt currently, and local pelletization plants operating at 35 percent of their aggregating capacity of 85 million mt per year, the government needs to extend excise duty benefits to enable the plants to maintain economically-viable cash flows.
The PMAI has also petitioned the government for changes in the distance-based freight rates of the government owned and operated Indian Railways as high freight rates have pushed up pellet plants’ cost of production by five times, the official said.
The official said that the cost of production of local pellet plants ranges between $85/mt and $100/mt, inclusive of freight rates depending on plant location and distance to the nearest port, and, with an average export price of around $63/mt, most plants are not finding outward shipment viable.