Panaji, Jan 4 (IANS): A recent decision of the union finance ministry to hike export duty on iron ore from 20 percent to 30 percent has irked trade organisations in Goa.

The Goa Mineral Ore Exporters' Association (GMOEA) and the Goa Chamber of Commerce and Industry (GCCI) Wednesday said the decision would hurt the mining industry very hard, even as the sceptre of the Justice M.B. Shah Commission probing illegal mining in India hangs over the mining trade in Goa.

In a statement, GMOEA secretary Glenn Kalavampara said the Dec 30, 2011, decision was detrimental to Goa's iron ore industry.

"We are shocked by the decision... Goan iron ore is low grade in nature with lesser Fe (iron) content and it is not used for internal consumption," Kalavampara said.

"In other parts of the country where high grades are produced, the mining industry is a small percentage of the GDP (gross domestic product) of a state. In Goa, it contributes to almost 35 percent of the state GDP."

"So, the effect of reducing the turnover of the industry will hit hard the common man...," said Kalavampara, calling for a urgent need to "upgrade technology so that low content iron ore could be used for domestic consumption."

In a letter to Finance Minister Pranab Mukherjee, the GCCI president Manguirish Pai Raikar said the finance ministry had not given any rationale behind the second duty hike in a year.

"The low grade ores in Goa are unsuitable for domestic steel manufacturers and will not benefit the domestic steel industry. The lumpy quality is of too low a grade to be used in Indian steel mills because of their location in India and the cost to transport it overland to the mills, which have access to far higher grades of lumps," Raikar said in the letter.

"If Goan iron ore is not exported and is not consumed in India, it ceases to become a strategic natural resource. It loses all economic relevance, and the low grade generated in the course of mining will have to be treated as a waste, causing environmental concerns to a tourist paradise," he said.

The mining industry in Goa, which exported over 50 million tonnes of iron ore in the last fiscal, is already reeling under pressure following a probe by the Justice Shah Commission.

The opposition has pegged the mining scam in Goa at Rs.25,000 crore.