Concerned over the allotment of mining leases, which mostly went to merchant miners, steel minister Ram Vilas Paswan has requested the Prime Minister?s Office (PMO) to ensure that the process is routed through the steel ministry.
?The steel ministry has consistently taken the stand that iron ore reserves (already established by government agencies) should be utilised for value addition for steel-making,? Paswan said in the letter.
Paswan has requested Prime Minister Manmohan Singh to ?re-look at the current position as to provide better coordination between mining and use of iron ore?.
The steel minister cited the model followed in coal allocation and asked the government to consult his ministry before allotment of iron ore leases. ?Before granting iron ore leases, the user ministry is not consulted and allocations, so far, have been made to non-steel makers by most of the states,? he said.
According to the steel/mines ministries data, of the 261 leases allotted between 2001 till April 2007, as many as 173 have been allotted to merchant miners. ?The way mining leases are granted to players without having steel plants, it only encourages exports of iron ore,? observed a senior official with the Steel Authority of India Ltd.
Except the two states of Chhattisgarh and Jharkhand, who have allotted mining leases mostly to the steel producers, states such as Karnataka, Orissa, Maharashtra, Goa and Madhya Pradesh have granted leases to merchant miners. ?Since iron ore cannot be used for any purpose other than steel making, the stand alone miners exports the raw material at high prices,? said an industry insider.
Of 39 mining leases Karnataka had awarded over the last seven years, only two have gone to steel producers. Orissa while allocating 33 leases have preferred merchant miners in 26 cases to steel makers, according to the data.