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Business News/ Politics / Policy/  Steel ministry pitches for special mining zones

New Delhi: The steel ministry has proposed setting up special mining zones (SMZs) in iron ore-rich regions along the lines of special economic zones, two ministry officials said. The idea was suggested to the mines and environment ministries in a presentation made recently.

The move will spur steel production, one of the officials said, as it will improve the supply of iron ore, a key raw material in steel production.

Mines in the notified areas could be excluded from requiring prior clearances under various laws; they will be auctioned to steel companies and administered by an environmental authority.

Steel projects in the SMZs will get single-window clearance. “This will ensure that individual companies do not have to go back and forth on various clearances and focus on their core business. Obviously, the steel ministry cannot implement this, so we have sounded it off to the mines and environment ministries," the official, who was at the presentation, said.

Under the plan, all iron ore-rich areas in states like Jharkhand, Chhattisgarh, Odisha and Karnataka—except those that have extreme biodiversity sensitivity—may be notified as SMZs.

“The notified areas may be excluded from the requirement of prior clearance under various laws," a steel ministry document, which Mint has reviewed, notes.

According to the document, the SMZs will be under the jurisdiction of a special environmental authority, which will lay down a detailed mining plan, supported by a comprehensive environment management plan. The area will then be allocated to steel companies through a transparent auction process.

As per the proposal, the authority will strictly monitor the adoption of an environment management plan, ensuring best practices for mining/environment measurement. The SMZs will also undergo periodic independent audit.

However, industry analysts are sceptical about the proposal.

Debasish Mishra, a senior director at consulting firm Deloitte Touche Tohmatsu India Pvt. Ltd, said that though the proposal sounds feasible in theory, implementation will be very challenging. “Going by the past track record of government in getting land for industrial projects, it’s a myth that government can get clearances easily. In fact, private companies do a better job." In the case of some oil and gas blocks under the New Exploration Licensing Policy (Nelp), the defence services have blocked exploration activity despite the government getting all clearances, Mishra said.

Ravi Uppal, managing director and group chief executive officer, Jindal Steel and Power Ltd, said the recent reform measures announced by the steel ministry are welcome but cautioned that action must happen on the ground as well. “We have seen with previous governments reform measures like single-window clearances have been discussed, but never implemented."

The new government last week signalled that it would set up a single-window clearance system for capital-intensive steel, coal and mining projects, as it seeks to lift flagging economic growth by speeding up approvals for investments.

Iron ore is a key raw material used in steel production and the steel ministry has forecast an iron ore supply crunch because of environmental constraints, mining caps and inadequate infrastructure to move iron ore.

According to an estimate by Metallurgical and Engineering Consultants Ltd (Mecon), India will exhaust its haematite iron ore reserves by 2032-33 if it has to meet a steel production target of 300 million tonnes (mt) by 2025-26. The steel ministry estimates that at 7% gross domestic product (GDP) growth, India will require 7.3 billion tonnes of iron ore by 2035-36.

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Updated: 02 Jul 2014, 11:27 PM IST
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