Steel minister Virbhadra Singh has advised the promoters of ArcelorMittal and Posco to offer annuities (long-term income stream) to the indigenous people who will need to be rehabilitated from the steel majors? proposed iron ore mining sites in eastern India, along with an assurance that the displaced families? ultimate rights to their pieces of land would remain inalienable. He said a generous rehabilitation scheme alone will smoothen mine allocations to private players.
In an interview with FE, Singh also called for a heavy, deterrent export tax on all grades of iron ore as the second best option to a complete ban on the exports of this depletive natural resource, where only lumps attract an export duty (5%) now.
He also hinted that the government may have to impose some sort of price control on mass consumption steel items if prices went beyond a point in the near future.
The minister drew attention to the high growth in rural steel consumption and said this needs to be sustained by keeping prices of ?steel varieties used by the common man? at affordable levels. Steel prices in India are now ruling at 60% of the peak level in July last year and long-product prices are particularly depressed; but emboldened by the economy?s revival, primary steelmakers are mulling a price hike.
The minister sees a ?strong case? for raising the royalty on various minerals to bolster state revenues, but wants the Centre to take the power to grant mining leases from states which are bogged down by ?too many vested interests,? causing inordinate delays in mine allotments.
The states? average royalty income from iron ore is just about Rs 18/tonne now, while the royalty or its equivalent in mineral-rich countries like China and Australia is much higher.
Singh feels displaced families have a natural right to benefit from their lands? economic value gain.
The minister said he has told the multinational companies to think of offering equity to the displaced families so that they have a stream of long-term income payable at fixed intervals. ?Once the mines are exhausted, the families could come back to their original dwellings,? he said, underlining what he called ?a more humane approach? to the vexed issue of relief and rehabilitation.
While ArcelorMittal is contemplating two modern steel units with a combined capacity of 24 million tonnes (mt) in Orissa and Jharkhand, the Korean company has acquired a part of the mining land for the first 5mt phase of its 12 mt plant in Orissa.
The minister was concerned about the long delays in greenfield steel projects, which are crucial to bridge the yawning gap in supply and demand of the hard metal when the country has lined up massive infrastructure investments.
?The investors need to be allocated the mining leases and get possession of the land within a fixed timeframe,? he said. One way to cut delays is to divest the states of their right to grant mining licences and vest that authority with the Centre, which is capable of taking a more holistic and balanced view of the issues concerned, the minister asserted. ?Being a five-time chief minister, I can?t but be a votary of states? rights but when it comes to questions of national interest, one has to take a view consistent with the federal principles,? the minister reasoned.
?The brownfield expansions of both the PSUs and private companies are well on schedule. SAIL itself is making an investment of some Rs 76,000 crore. These projects would enable the country to comfortably meet the target of 124 mt steelmaking capacity by 2011-12. But since the demand is growing faster than the production (8% versus 3%), brownfield expansions do matter,? Singh said.
Pitching for a ban on iron ore exports, the steel minister said China, despite its abundant reserves of coal and iron ore, prefers to be a ravenous importer of these minerals. ?It is not prudent to export a natural resource like iron ore, especially when the domestic demand for steel is growing exponentially. We should build capacities and export steel instead,? he said.