Mining Body Warns 30% Iron Ore Export Duty Could Cripple Sector

India's mining sector is bracing for a potential economic earthquake as the Utkal Chamber of Commerce & Industry Ltd (UCCIL) issues a stark warning against the government's proposed 30% export duty on low-grade iron ore, set to take effect from October 2025. In a strongly worded statement, the industry body predicts the measure will trigger a cascade of disasters, including slashed production, plummeting domestic prices, long-term capacity erosion, and a severe blow to India's global export edge.

The UCCIL's alarm comes amid heated debates between miners and steelmakers, with the former arguing that the duty—aimed at bolstering domestic supply for steel production—ignores the realities of low-grade ore utilization. "The proposed export duty will also result in sectoral destabilisation: a likely decline in production, crashing domestic prices, erosion of India's export competitiveness, and long-term capacity losses," the chamber stated, emphasizing ripple effects on employment, regional economies, and overall industrial output.

Odisha, the powerhouse behind 55% of India's iron ore production, stands to suffer the most. The state, home to major producers like NMDC Ltd, Odisha Mining Corporation, SAIL, Tata Steel Ltd, and JSW Steel, could see an annual revenue hit exceeding Rs 10,000 crore to its exchequer, according to industry estimates. Across mining-dependent states, the collective loss could balloon to over Rs 16,200 crore, endangering the livelihoods of more than five lakh people reliant on the sector.

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In a direct appeal to Odisha Chief Minister Mohan Charan Majhi, UCCIL highlighted the human cost: "Any such move would adversely affect not just state revenues but also the viability of mining operations and the livelihoods of thousands dependent on the sector, particularly in remote and economically vulnerable regions." The chamber urged the state government to shield its iron ore industry from what it calls a "sector-destroying" policy.

This isn't the first time India has toyed with such duties. In May 2022, a 50% levy on low-grade ore (below 58% iron content) and 45% on pellets was imposed to curb exports and feed local steel demand, only to be scrapped six months later amid miner backlash over lost opportunities. Production has since surged, reaching 277.83 million tonnes in 2024-25—a 4.3% year-on-year increase—with a surplus of 14 million tonnes last year projected to hit 35 million in 2025-26.

Yet, the steel lobby, represented by the Indian Steel Association (ISA), pushes back hard. They advocate for a 20% tax on low-grade ore and 10% on pellets to address "shortages" and promote value-added exports like beneficiated ore. Recent monsoon disruptions have spiked domestic prices by 7% in Odisha, fueling steelmakers' calls for cheaper raw materials to stay competitive against Chinese imports.

The Federation of Indian Mineral Industries (FIMI) echoes UCCIL's concerns, submitting a memorandum to the government stressing no iron ore scarcity exists for domestic use. Director General B.K. Bhatia noted, "There is no dearth of iron ore in the country... the steel industry does not use [low-grade ore]." State governments in Odisha and Goa have also voiced opposition, fearing reduced royalties and trade hurdles.

As the October deadline approaches, the standoff risks environmental fallout too—unused low-grade fines could pile up, creating hazards. With India eyeing 300 million tonnes of annual steel output by 2030, the duty debate pits export-driven growth against domestic self-sufficiency. Miners warn of "new trade challenges" and idle beneficiation plants, while steel executives counter that many firms already have tech to process low-grade ore. The government's next move could reshape not just mining fortunes but India's role in the global iron ore market, where exports—mostly to China—hit 30 million tonnes in 2024-25.

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