New National Mineral Policy: Steel Ministry pins transport infrastructure, high royalty as focus points

Among suggestions before mines ministry, the steel ministry’s inputs on ensuring iron ore availability for steel firms and developing Special Mining Zones may help the latter achieve its iron ore targets.

Written by Deepak Patel | New Delhi | Updated: November 15, 2017 7:04:53 am
Sirigao iron ore mining, Supreme court, mines industry, mining ministry, steel ministry, iron ore in india, Special Mining Zones Sirigao iron ore mine in Sirigao village in Goa. (Express Photo)

Slashing the royalty rates charged on mineral production; discouraging road transport of minerals and increasing the share of rail transportation; streamlining iron ore supply with the help of long-term supply agreements between steel companies and miners and developing Special Mining Zones (SMZs) to upgrade the scale of ore production in ‘iron-rich free hold areas’ are among the suggestions that the steel ministry has proposed to the mines ministry. The mines ministry is currently in the process of formulating a new national mineral policy.

On August 2, 2017, the Supreme Court had passed a judgment, wherein it directed the Central government to revisit the National Mineral Policy, 2008, and announce a “fresh and more effective, meaningful and implementable policy” before the end of this year. The mines ministry formed a committee after this judgment and its first meeting took place on August 28. During the meeting, mines ministry officials asked all stakeholders, including the Ministry of Steel, to send their comments and suggestions on the National Mineral Policy.

In its suggestions, the steel ministry stated that since India has high royalty rates as compared to other countries, the existing rates charged on mineral production should be examined for “bringing it at par with global level to make it globally competitive”. “Further, all levies like royalty, DMF (District Mineral Foundation), NMET (National Mineral Exploration Trust), Forest Development Tax etc should be subsumed in a single levy, say royalty, and financial burden of these levies/royalty should be made ‘tax pass through’ i.e. benefiting input tax credit on such payment should be available under GST”, it has said in its suggestions.

National Mineral Policy, Sirigao iron ore mining, Supreme court, mines industry, mining ministry, steel ministry, iron ore in india, Special Mining Zones

The steel ministry has also noted that a major thrust needs to be given on developing transport infrastructure for minerals. “Inadequate mineral evacuation infrastructure hinders the development of mining industry. While local evacuation network will be encouraged to be built in an integrated manner along with developing the mineral blocks, dedicated National Mineral Corridors shall be planned to facilitate transport of minerals from distant mining areas. Road transportation will be discouraged as far as possible while all possible steps will be taken to increase the share of rail transportation. Other environment friendly options like use of coastal ways, inland shipping, slurry pipelines etc will be promoted,” the steel ministry suggested.

Kameswara Rao, leader (energy, utilities and mining) at PwC India told The Indian Express: “An integrated plan for a region, which combines rail and other mineral transport systems such as pipelines, can reduce costs, loading losses and environmental damage. This is not feasible at an individual level, and commonly, road transport becomes a default, albeit inefficient, solution.”

One other major area of concern for steel ministry has been ensuring iron ore availability for steel companies. The steel ministry has said in its suggestions that iron ore supply within the country should be streamlined “by means of long term supply agreements between steel companies and miners” and this measure will help in attracting investments in the mining as well as steel sector. According to Rao, the global trend has been towards longer term contracts with user industry which allowed more secure and advanced investments into mine development, thus benefiting both, the resource and the user industry.

On the topic of ensuring iron ore availability, the steel ministry has added that the approach of mines ministry should be different for different minerals and “putting a cap on iron ore mining is not necessary because iron ore used for making steel gets recycled substantially”. In July 2011, the Supreme Court banned mining of iron ore in Karnataka following allegations of illegal mining that had resulted in large-scale abuse of the environment. The apex court on April 18, 2013, had allowed mining in Karnataka, but with the cap of 30 million tonnes per annum.

Goa had suspended mining activities in September 2012, after Justice M B Shah commission report on illegal mining in the state was tabled in Parliament. Goa’s main mining activity is related to iron ore. The Supreme Court formally imposed the ban on Goa’s all mining activities in October 2012. Partially lifting the ban in April 2014, the apex court, in a judgment, set a 20 million tonne per year cap on iron ore extraction in the state. “There is merit in capping production for proper management of resources as much as for environment. Ideally, to minimise uncertainty, this should be stipulated within the lease and not force the courts to step in. Further, a sector focused regulator could be set up to oversee this on ongoing basis,” Rao told The Indian Express.

India’s National Steel Policy projects that country’s crude steel capacity would be 300 million tonnes per annum (MTPA) by 2030-31. According to steel ministry, India would need 500 MTPA of iron ore production to produce 300 MTPA of steel. In order to achieve the ore target of 500 MTPA, the steel ministry has suggested developing Special Mining Zones (SMZs) to upgrade the scale of ore production in ‘iron rich free hold areas’.

Ministry of Steel elaborated on this SMZ plan with the Ministry of Mines. “State governments would complete exploration, develop large size blocks, obtain all statutory clearances and auction the ready-made blocks with pre-embedded clearances in a transparent manner. While enhancing the level of mineral production, carrying capacity based sustainable development of remote iron ore bearing regions will be ensured through scientific and eco-friendly techniques of mining and mineral beneficiation. Integrated insfrastructure facilities for mineral evacuation will be given due importance while developing SMZs,” it said.

The steel ministry has also stated that mines ministry should take steps to discourage export of minerals and it should rather encourage export of “value added form as far as possible”. The steel ministry added: “Besides adding to the state exchequer this (encouraging of value added form) will create substantial employment generation for the local populace.”

PanchayatMin for suggestions of gram sabhas

New Delhi: The Ministry of Panchayati Raj has suggested to the Ministry of Mines that a prior recommendation of the gram sabha or the panchayat — at an appropriate level in the scheduled areas — should be made mandatory before granting any reconnaissance permit (RP), prospecting licence (PL) or mining lease (ML) for a minor mineral.

Scheduled areas, which are defined in Article 244 of the Constitution, are found in 10 states of India that have predominant population of tribal communities. The mines ministry would need to amend the Mines and Minerals (Development and Regulation) Amendment Act, 2017, in case it wants to take action on the aforementioned suggestion.

When asked if such a prior recommendation of the Gram Sabha or the Panchayat should be made mandatory, Kameswara Rao, leader (energy, utilities and mining) at PwC India, told The Indian Express: “This may not be entirely practical, as the intent of the future developer cannot be foreseen at an early stage. However, the state agencies should work on both securing some of these consents as well as access and pre-development works.”—Deepak Patel

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