Is it a steal?
Industrial sectors, states scrap over mining bonanzas
The mining and steel industries are at loggerheads over iron ore deposits. The steel industry has demanded exclusive use. It fears exports will deplete reserves forcing steel-makers to depend on imports. It further argues that India should export steel and not ore because a tonne of steel adds 7-10 times more of value and creates five times more direct and permanent employment than mining alone.
The steel industry was backed by a group on mining leases headed by R K Dang, a former mines secretary. Constituted by the Union steel ministry in August 2005, it said in its 2006 report: "The country's natural advantage of rich iron ore reserves must not be frittered away by continued positioning as a raw material supplier to the developed world and now, even to rapidly industrialising China.' But the mining industry strongly opposed this stance.
Miners wanted the right to sell ore at the best international prices.They argued a ban on exports was unnecessary if steel-makers were willing to pay competitive prices and iron ore was not in short supply: more exploration would unearth more resources to supply the steel industry, however fast it grew. They further argued that a ban on exports would impact employment and socio-economic development in backward and tribal belts.
The Hoda committee backed the miners, saying restrictions on exports would hamper foreign direct investment. While ruling against restrictions, it said that the position should be revisited after 10 years. However, it recommended that captive mines should not be allowed to export ore. The current budget made the issue messier by levying a duty of Rs 300 on every tonne of iron ore exports.
State wars The debate over value-addition is not restricted to two industrial sectors. Mineral-rich states are also apprehensive about raw minerals leaving their boundaries.
While recommending dismantling the policy of compulsory value-addition within the state where a mineral is extracted, the Hoda committee says it blocks investment in stand-alone mining. But it concedes that if there are number of applicants, preference can be given to the applicant who will set up a processing plant within the state.
Chhattisgarh, Jharkhand and Orissa are, however, unhappy with this formula and have expressed their concerns to the prime minister. They want value-addition within the state as a precondition for granting concessions, to attract industry, generate jobs and widen their tax base.
But other states are opposed to these preconditions. They argue that setting up an industry is a commercial decision based not just on availability of minerals. Other factors like infrastructure, proximity to markets and skilled manpower are also important. They argue that since minerals belong to the country they should not be subjected to restrictions on interstate movement.
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