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Tuesday, October 26, 2021

Ministries’ war over amending MMDR Act gets messier

It’s a turf war on interests of PSUs in mining....

Written by Priyadarshi Siddhanta | New Delhi |
September 30, 2009 1:39:13 am

The differences between the steel and mines ministries on amending the existing MMDR Act simply refuse to die. This time the two are pitted against each other in a turf war on protecting the interests of the state-run behemoths in reserving mining areas for them in order to ensure a level-playing field.

In a marathon meeting recently,the top brass on both sides were sharply divided over a number of issues to be addressed in the Mines and Minerals Scientific Development and Reguation Act,which has been drafted by the mines ministry. The steel ministry officials insisted on continuing with the Centre’s overriding powers in granting mineral concessions for steel-making inputs such as iron ore,chromite,manganese,etc. They also demanded the restricting of monopolies in the auctioning of mines and the initiation of suitable provisions to accord priority to domestic end-use industries over others,a top mines ministry official told The Indian Express.

Not impressed with the suggestions,S Vijay Kumar,additional secretary,mines ministry,who chaired the meeting,made it clear that his ministry would abide by the principle of maintaining “an arm’s length” in acting as a regulator in case of non-coal and non-atomic minerals in accordance with the principles enunciated by the Hoda Committee. Kumar told steel ministry representatives that steel prices were determined largely by international prices and other inputs in steel making and iron ore as a factor contributes to less than 4.5 per cent to the cost of producing steel. “Thus,the introduction of an auction might not impact steel prices substantially,” he pointed out,a fact which may not go down well with the steel ministry.

Most importantly,in response to the contention of the steel ministry that there is a dire need to continue with the policy of reserving mining areas for the state-run behemoths,Kumar countered,saying “reservations for PSUs are not the most optimum method of affording protection and a level-playing field to them. In the effort to remove reservation for PSUs,it is hoped that distortions in pricing and backdoor entry of non-eligible players through joint ventures with the PSU is also addressed.” However,provisions could be made for ensuring preference in the bidding process to PSUs who are value-adders or end-users,he added.

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