Exactly 20 years after it opened the door for the private sector in beach sand mining, the government has now taken away their right to export minerals on their own through a gazette notification and introduced a canalisation system.
Exactly 20 years after it opened the door for the private sector in beach sand mining, the government has now taken away their right to export minerals on their own through a gazette notification and introduced a canalisation system. Players in the sector called the policy “myopic” and said their exports — Rs 4,000 crore per annum — will be hit hard.
The primary aim of canalisation of exports through Indian Rare Earths (IRE), is to curtail direct private sector export of beach sand minerals and their derivatives such as ilmenite, rutile and zircon, thereby keeping a close tab on shipments.
Beach sand minerals and their derivatives find diverse applications in paints and other decorative materials, papers and plastics as well as strategic and hightech applications. Currently, a major share of domestic production as well as exports are done by private sector firms.
“Export of beach sand minerals have been brought under the STE and shall be canalised through IRE. Beach sand minerals, permitted anywhere in the export policy, will now be regulated in terms of the new policy,” the notification said.
Private sector firms such as VV Minerals and Trimex, which do the bulk of exports, said the move would have far-reaching negative impact on the country’s beach sand minerals industry. Apart from coordination-related problems with IRE, the apprehension of untimely and irregular payment is also haunting them.
“The new policy to canalise all exports by private companies through IRE is a further blow to private companies. Private firms have made huge capital investments by way of technology, production facilities and established significant share in global markets. IREL is a competitor, and forcing private firms to canalise exports through IREL is an unfair business practice,” said V Subramanian, director of VV Mineral.
The ‘myopic’ policy will choke the sector which has the potential to transform India to a major global producer of high value products, he said. Since all minerals will be canalised through IRE, the PSU will remain the only touch point for overseas customers and this will erode the existing customer base that private sector firms have created over the years.
“The new policy comes as a huge setback to a niche beach sand mining industry. It increases our unease of doing business by rendering us globally uncompetitive, limits our abilities to bargain with global customers, binds us in potentially avoidable procedural delays and puts curbs on our expansion plans by throttling commercial activities,” said Pradeep Koneru, CEO & ED, Trimex Industries.
Beach sand minerals mining activity in India commenced in 1908. Until 1998, except for garnet, other minerals were restricted only to public sector companies. Production and value addition improved following the government ushered in liberalisation in 1998 allowing participation of the private sector.
Following the entry of the private sector, production of ilmenite and rutile increased to 5.2 lakh tonne and 72,000 tonne, respectively, in 2015-16. In sync with the rise in production, the export value has increased from approx Rs 35 crore in 1998 to over Rs 4,000 crore in 2016-17.