Spark in the soot
states of eastern India are locked in a tussle over private investment in steel plants. Jharkhand chief minister Arjun Munda recently avowed to not allow private investors access to his state's iron-ore reserves unless they set up plants in the state. In an impassioned speech before fellow chief ministers at the Eastern Zonal Council (ezc) conference, held in Ranchi, he reportedly detailed how, for several years, tribals of Jharkhand have been exploited in the name of development.
Fifty seven per cent of India's iron ore reserves are concentrated in three of its poorest states: Orissa, Jharkhand and Chhattisgarh. Since the Union government can allocate mining leases only on the recommendation of the states concerned, Jharkhand and Orissa are holding the industry's feet to the fire, offering mining rights only to companies that agree to set up plants on their land. Their argument: they need to improve their people's quality of life. But this attitude doesn't sit well with other states of the region, especially West Bengal (wb), which has no iron ore deposits and depends on Jharkhand and Orissa to support its steel industry (see box: Plant problems).
The tussle has gathered increased significance because international steel giants are eyeing India's iron ore reserves with greater interest after global iron ore producers in Brazil and Australia raised their prices by nearly 71 per cent earlier in 2005 (following last year's phenomenal rise in steel prices). At 13 billion tonnes, India has the fourth largest iron ore reserves in the world, much of it untapped.
Among major global steel players rushing to India are Mittal Steel, planning a 10-million tonne plant in Jharkhand, Pohang Steel Company of South Korea, which is looking at a 12-million tonne factory in Orissa and Bao Steel of China, which is still hunting for a location to set up shop. The two big domestic players, Tata Steel and Steel Authority of India Limited, and smaller ones, like Jindal, Essar and Ispat, are also mulling major expansion plans.
They have a point Relations between Jharkhand and wb have been strained since the Munda government decided to cancel the lease of three iron-ore mines leased to the Indian Iron and Steel Company Limited , which has its steel works in wb. They soured further in April 2005 when Jindal Steel's Rs120,000-crore project for wb got stuck because Jharkhand refused to award it a mining lease if it built its plant in the neighbouring state.
"We have a problem of unemployment here and because of that naxalism is on the rise,' explains Jharkhand mining secretary A K Singh. "We have to bring in industries to generate employment.' Munda told the ezc conference that thousands of hectares of land have been taken from the tribals for "development' but little has been done to improve their lot. What's worse, the state government is still being asked repeatedly to acquire more tribal lands for developmental purposes, he added.
wb commerce and industries secretary Sabyasachi Sen admits:"It's true we are feeling the pinch...our view is India is one country and investment locations within the country should be based on where an industry can get maximum resources. Anything else takes us back to the old licensing age which was done away with 15 years ago.' Besides, he adds, "We should consider seriously why we should export the raw material to other countries instead of using it to manufacture steel ourselves and export the value-added product.' India mines around 150 million tonnes of iron ore annually, 60 per cent of which is exported. "Of course we want foreign investment, but we should sign deals for the entire steel production process to be done here,' he explains.
Let's work together
Sen suggests the states of the region should "work together for mutual benefit', echoing wb chief minister Buddhadev Bhattacharjee's proposal to set up a special interstate council that would work for attracting investment and promoting industry without any conflict of interest. Small steps have already been taken in this direction. Orissa has suggested talks with wb to discuss mining leases; officials from both the states will meet soon. Singh says Jharkhand, too, is open to talks on sharing resources.
Sen also concedes that Orissa's and Jharkhand's concerns are valid: "It's true that the tribals have been exploited and we must be sensitive to that. If you say