An iron ore miner will have to upgrade through beneficiation 80% of the low-grade ore produced in a mine annually or face penalty including termination of the lease, if the mines ministry accepts recommendations of an inter-departmental committee.
If the recommendation is finally endorsed by the government, it will impact both merchant and captive miners, including Rungta Mines, Vedanta, Serajuddin & company, JSPL, JSW Steel, as they will have to either put up new beneficiation units or expand capacity of the existing units, according to industry sources. While putting up capital-incentive infrastructure is itself an onerous task, the miners will also have to acquire land for putting up the unit which is again a big task.
The government had constituted the panel to suggest ways to ensure better utilisation of low and lean grade iron ore resources in the country.
Typically, about 20% of the produce during mining turns out to be low-grade iron ore, having less than 58% iron content; the rest contains 62% or more. India produced 253 million tonnes (MT) iron ore last fiscal. The domestic steel industry does not use low-grade ore for lack of available technology. It uses higher-grade (62%Fe or above) in the blast furnace or pellets produced through beneficiation of low-grade ore in the iron-making. The remaining low-grade ore is generally exported.
As per the committee’s recommendations, which the mines ministry has put up in its website for consultation with industry, 80% of the ore having less than 58% Fe content produced annually in a mine will have to be beneficiated for 62% or more iron content.
“In case of shortfall in beneficiating the 80% of low-grade iron ore of below 58% Fe, which shall be assessed on a quarterly basis, the lessee shall pay to the state government, an amount of royalty and premium as applicable to the iron ore lumps or fines of 62-65% grade, as the case may be, on the difference between the minimum quantity of mineral to be beneficiated in the said quarter and the quantity actually beneficiated,” the committee recommended.
On top of it, the committed suggested that the state government may terminate such lease where the lessee does not maintain the minimum quantity of ore to be beneficiated for two successive years and fails to pay the amount payable on such shortfall after two years. The state, however, will have to give the lessee a reasonable opportunity of being heard.
The committee, however, does not make it mandatory for each miner to set up beneficiation unit – he can transfer the produce to do the beneficiation job in a neighbouring mine which has the facility or at a merchant beneficiating unit outside the lease area.
“If such transfer is done to a neighbouring mine or to a merchant beneficiation plant outside the lease area, then such quantity will be counted under the mandatory 80% limit. Suitable provisions have to be made in the rules to account for the transfer of low-grade ore from one mine to another so that there may not be any loss of revenue to the state governments and also there may not be any incidence of double royalty,” the committee has suggested.
The committee also proposes to provide a mine owner a 5% concession in the rate of royalty on the quantity of low-grade ore beneficiated through wet process and 10% concession in the rate of royalty on the quantity of low-grade ore beneficiated through dry process.
“Such concession may be allowed on 20% quantity of the annual production of iron ore of all grades. This benefit may be considered to be extended only to the portion of the low-grade ore h having Fe contents below 58%, which is upgraded to 62% Fe contents and above.
The committee suggests that the policy may initially be adopted for a period of five years and be reviewed every after five years.