The progressive MMDR Ordinance adopted by the Narendra Modi-led government seems not able to bring any changes on the ground. What was intended to end the sordid tale of woes for the mining sector and jumpstart growth by facilitating this essential sector, which accounts for raw materials for the manufacturing sector, seems to have ended up with zero impact with no state government in a mood to accept this piece of legislation in its true spirit, say industry watchers.
FE earlier reported that following a government notification on July 18, more than 40 (mostly iron ore) mines in Odisha and Jharkhand, including those belonging to Sail, Tata Steel, Odisha Mining Corporation, Essel Mining, ACC, Hindustan Copper, Hindalco Industries and Uranium Corporation of India have faced closure. When recently checked, post the President giving the go-ahead for the Ordinance last month, not a single of these mines have been allowed to resume operations.
Mineral rich states such as Odisha, which garners one of the highest mineral royalties of R6,000 crore every year, has adopted the most dissident approach. Though overshot the period stipulated for renewing 18 leases, the state has rather proposed to auction these leases, which merit extension as per the provisions of this Ordinance.
The Centre’s Ordinance is targeted to address a crucial deadlock with states on the issue of second and subsequent renewals to finally offer a solution for the mines that are awaiting lease renewals. The 15-year extension provided by the Ordinance for these captive mines will enhance the state exchequer and address the raw material shortage being faced by the industry.
“The Ordinance is truly in the benefit of all stakeholders–Centre, state and the industry, who now need to work together towards establishing a stable and progressive mineral regime. Hence, it is hoped that the Ordinance is widely supported by all the key stakeholders, as it seeks to boost transparency in the mining industry as well as streamlining the delivery development mechanism in mining areas”, said Sushim Banerjee, director-general, Institute of Steel Development & Growth (INSDAG).
But in reality, the Ordinance, which was supposed to be an instant hit, has become a flop, thanks to the cold response of the states.
After the Ordinance was issued last month, Union minister of steel and mines Narendra Singh Tomar held a meeting with states to break the log jam, but it could not change the states’ stand.
“The transition period of 15 years for captive mines is a logical step to restore the production of raw material, thereby enabling key end-user sectors that were impacted by mine closure and uncertainty on the principle of second and subsequent renewals. It is essential for state governments of mineral rich states to support the sustainable principles of optimising returns rather than look at short-term gains from auction of captive mines”, said DRS Chaudhary, former steel secretary.
The ongoing tussle between the states and the Centre on the interpretation and the subsequent consequences of the Ordinance has only amplified the already stressful situation of raw material security for critical end-user sectors such as steel.
The closure of mines has a considerable impact on the iron and steel industry, which is a critical foundation industry for sectors such as infrastructure and manufacturing. Iron ore production in the country has come down from 218 million tonnes in fiscal 2009-10 to 144 mt in 2013-14. In lieu of the expected shortage, captive miners have been forced to rely on existing inventory and imports to meet raw material requirements.