New Delhi: A group of ministers cleared India’s new mining policy but rejected a demand from domestic steel manufacturers for a cap on iron ore exports.
The policy, which will now be put before the cabinet for approval, seeks to expedite mining applications and allow some steel companies to own mines. The government hopes that these changes will help attract an estimated foreign direct investment of $2 billion (Rs8,000 crore).
“The GoM has decided there will be no cap on iron ore exports. The issue of upward revision of export duty (on ore exports) was also not discussed,” said an official close to the development.
As present, there is no cap on the export of ore. But steel makers want the exports to be regulated or banned completely so as to feed their own plants with scarce ore. The steel sector had made elaborate presentations on why ore should not be allowed to be shipped out of India in earlier meetings of the GoM.
The draft policy put together by a committee that was headed by Anwarul Hoda, a member of the Planning Commission, was in favour of exporting surplus iron ore, after domestic consumption was met.
The official said the recommendations of the Hoda Committee have been accepted. “Even the environmental issues suggested by the committee have largely been accepted but for minor details,” he said.
He added that the GoM had approved “seamless and guaranteed transferability of mining operations”. This means that companies, whicho get an initial survey licence to identify a potential mine, will also get preference in the grant of the actual licence if their prospecting bears fruit.
Experts say the way forward is to deregulate the sector and set out clear guidelines. “In order to get more investment, both from private and foreign companies, the government needs to make the mining sector more vibrant and conducive for investors,” said Arvind Mahajan, executive director, KPMG Advisory Services. He added that this would include setting out clear guidelines on environmental issues.
As recommended by the Hoda committee, the GoM also ruled that state governments should not force a company to which they were granting a mining licence to locate its processing plant within the state. Jharkhand , Chhattisgarh and Orissa wanted companies that process iron ore to source it from the state (or use it to make steel) and locate their plants within the borders of the respective states.
To ensure that states do not favour new entrants that are making substantial investments, GoM said steel firms which existed in July 2006 should be given preference while allocating captive mines.
The group is headed by Union home minister Shivraj Patil, and includes steel minister Ram Vilas Paswan, minister of state for mines Sis RamOla, commerce and industry minister Kamal Nath and power minister Sushil Kumar Shinde.