MOIL ltd seeks fivefold rise in import duty on manganese

MOIL Ltd, India’s biggest manganese ore producer, is seeking a hike in duty on import of ore to counter cheap imports that are creating oversupply situation.

This will help the company in fighting an aggressive set of importers who are easily bringing the ore into the country due to a very low import duty of 2% and flooding the market with oversupply, said KJ Singh, chairman and managing director, MOIL.

“Earlier because of low customs duty, ferro alloy manufacturers were importing the ore into the country, converting it and then exporting it back to industries overseas. But of late because of a low demand from overseas territories, even these players are now selling it in the Indian market,” Singh told DNA on Monday.
This has led to an oversupply in the Indian market thereby pulling the prices by almost 43% since January 2011. Currently, price of manganese ore is ruling at Rs8,300 per metric tonne. 

Singh said last year too the company had requested the government to hike the import duty but it was not done. This year the company will request again and pursue the issue. “We want the government to increase the duty five times to 10% so that the domestic market remains intact and there is no oversupply situation,” he said.

According to the company, in the last financial year while the production of steel, the main consumer of manganese, increased by 16% world over and 6% in India, production of manganese rose 33% globally and 22% in India, respectively.

This has led to an excess availability of 12 million tonne of manganese globally, leading to a drastic fall in demand. Besides, with the importers now focusing on India markets due to a shaky world market, the ore in the country is witnessing very less realisations.

“To keep up with our sales numbers, we have also brought our prices down to international prices but this has exposed the company to importers who have the benefit of low import duty,” Singh said. He said while even MOIL can focus on the export markets to sell its ore, it is a company policy to not to export or sell to traders as it prefers to meet the domestic demand first.

India currently manufactures 2.86 mtpa of manganese ore, out of which 1.15 mt is met by MOIL. Globally, the production is 47 mt against a demand of 35 mt. This demand mainly comes from the steel sector, which requires 30 kg of manganese for manufacturing one tonne of steel.