Two major steel-makers have written to the Centre seeking assistance on various issues, including removal of chrome ore exports from the canalised list and waiver of import duty on steam coal, a steel-making raw material.
While Tata Steel sought removal of chrome ore from the canalised list of export items, ArcelorMittal Nippon Steel (AM/NS) India wanted inclusion of steam coal in coal categories where import duty was waived-off.
“Canalisation” of export means export only through the agencies designated by the Central Government. Currently there is nil customs duty for anthracite, pulverised coal and coking coal.
Tata Steel has addressed the letter, written in June, to the Union Ministry of Commerce with the latter seeking opinion of the Ministry of Mines and forwarding a copy of the same to the Ministry of Steel in July.
AM/NS India wrote to the Chairman of Central Board of Indirect Taxes (CBIC) and sought “personal audience”.
Dispatch levels
Tata Steel raised concerns over failure to maintain minimum dispatch levels since export through MMTC was hit because of the latter’s financial distress.
The letter says, Tata Steel Mining Ltd (TSML) – a 100 per cent subsidiary of Tata Steel– acquired three mines, namely Sukinda, Saruabil and Kamarda through auctions in 2020. Rules mandate a dispatch of minimum 1.6 million tonnes chrome ore per annum, failing which penalty provisions will be imposed. The chance of lease termination by the Government is also not ruled out if there is failure.
Being under the canalised list, chrome ore has been exported through MMTC and tenders were floated in June. However, after dispatch of materials to container freight stations at Vizag Port “for anticipated exports”, the tenders were cancelled on June 6. Accordingly, compliance of a minimum dispatch requirement becomes “very difficult” and there is also an “acute shortage of space at the port” (as the previously dispatched material is already stacked there).
“We understand, owing to financial distress MMTC has been declared an NPA by the banks due to non-payment of working capital loans and funded interest term loans. This poses a threat for payment to MMTC’s vendors...” it wrote adding that removal of chrome ore from the canalised list “would facilitate export without hindrance and help miners” achieve minimum dispatch targets and avoid penalties.
Steam coal import
AM/NS India said steam coal is used in corex furnaces for production of hot metal which is then used in downstream process of steel-making.
If the nil rate on basic customs duty and agriculture infrastructure and development cess on steam coal is not brought in, corex furnace and sponge iron manufacturing units will see an increase in raw material cost; cost disadvantage over those using coking coal and inconsistencies in supplies.
“....non explicit specification of steam coal .... will create hindrance in clearing of cargo at customs port,” the letter said requesting CBIC for including all types of coal, “including steam coal” retrospectively.