Mineral production must go up 2.2 times from the current level in order to enhance the mining sector’s contribution to the country’s GDP by 1 percentage point to 3.6% by 2019-20, the mines ministry has estimated.
“This means the production in the mining segment should grow by 21-22% on year-on-year basis,” a senior mines ministry official said, adding that for any strategy to enhance the contribution of the mining sector fuel minerals like coal hold the key.
Of the Rs 2.7 lakh crore estimated value of mineral production (excluding atomic minerals) last fiscal, fuel minerals’ contribution was 64%. Minor minerals had 18% share and the remaining 14% was contributed by major minerals such as iron ore, bauxite, chromite, manganese ore, elad and zinc. The ministry feels that a two-pronged approach, laying thrust on both supply and demand side, was required to achieve the target.
In order to give supply-side push, it intends to bridge the gap between sanctioned capacity of mining plan and the current production level as it feels that even with full utilisation of the mining plan capacity, anticipated production would be significantly short in respect of limestone, chromite and bauxite.
“Therefore, to mitigate the supply side constraint, initiatives would be required for identification and execution of blocks obtained through auctions, expediting clearances, reducing the gestation period, use of technology to enhance productivity and optimise production from operating mines,” said a source.
Acknowledging that the demand elasticity of minerals is dependent on growth of infrastructure and industrial sector, the source said excess domestic production will meet the export demand provided it is competitive enough to make inroads in the international commodity market. The mines ministry is also for rationalisation of duty structure which could help at the margin as fostering efficiency is the key.
The plan also includes enhancing production by operationalising all the 3,844 mining leases of major minerals from only 1,800 now and expediting more than 100 mining lease pending case for renewal in different states. There was also a need for expediting environment and forest clearances for pending cases.
Knowing that iron ore could provide a huge push to achieve the target, the mines ministry intends to lay thrust both on increasing domestic consumption and exports of the steel-making raw material. There are plans for rationalizing export duty on iron ore and current rate of rail freights. It would also make effort to enhance demand for value-added products of iron ore.