The group of ministers (GoM) on the National Mineral Policy 2007, headed by Shivraj Patil, has given its green signal to continue with the present policy of exporting iron ore. It further proposes to allow the allocation of captive iron ore blocks to all steel companies.
The recommendations of the GoM are in line with those of the report on mineral policy prepared by a committee under Planning Commission member Anwarul Hoda and submitted to the government last June. It had said all qualitative and quantitative restrictions on iron ore exports should be removed.
?There is no shortage of iron ore in the country. If the domestic demand for iron ore increases significantly, nobody will export,? said a government official. The proposals of the GoM will now be placed before the Union Cabinet, he added.
The government would, however, review the position every five years, the official said. The Hoda committee had suggested continuing iron ore exports citing no dearth of iron ore in the country. Aggressive mining would improve the chances of finding more reserves, it said.
The decision to give captive iron ore blocks to all companies will benefit steel firms like RINL, Essar and Ispat, which have plants in non-iron ore states like Andhra Pradesh, Gujarat and Maharastra, respectively. The Hoda panel had said only companies with units in iron ore-rich states should be allotted captive mines.
The GoM?s decision to allow free iron ore exports comes despite stiff opposition from the steel industry and steel ministry. The steel industry has been demanding a cap on iron ore exports at the current level. Exports should be subsequently phased out completely by reducing it 15% every year over the next six to seven years, it said.
Industry fears that if exports continue at this brisk pace, the country will not be left with much iron ore 20-30 years from now and will not be able to meet even domestic demand. While India produces about 175 million tonne of iron ore, about 50%, or 90 million tonne, is exported. The major purchasers include China, Japan and Korea.
The GoM has not taken any decision on the issue of royalty as it wanted an expert group already set up to take a final call. ?In 2004, the committee almost decided to move towards an ad valorem system, but many states opposed it,? an official source said.