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India Needs to Review its Natural Resource & Mining Policy

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The various ministries of the Government are gradually tightening up the process of clearing projects and activities related to the mining sector.

As per a new proposal, the Mines Ministry has sought shareholding to the extent of 26% of the company for free, through the promoter’s quota, for land-losers in new mining projects of the companies. The proposal further gives the land losers an option to either go for free shares in a company or share annual profits.

Apart from the new proposed law on mining, the environment ministry is also tightening the ropes in a bid to rationalize the environment clearances for coal blocks. The ministry has identified about 35% of the existing coal blocks as falling in the no-mining area in which the ministry will not entertain proposals.

mining

My view is that any government exporting its ores and minerals in raw form is accepting that the prevailing technology in our country is inferior in its ability to process its natural resources.

Take, for instance, any country in its development stage would initially be found exporting whatever natural resources it has in abundance within the geographical reach it is blessed with. However, slowly it looks to acquire technology to process its home resources into intermediate products for both export and domestic consumption.

Then, as it reaches a stage when the country has the enhanced capability to process its own resources into final end-products, such processed products are either used domestically or exported with enhanced value-added creation that are more beneficial economically to the nation and the exchequer.

Take the case of Middle East countries. Initially, the West was taking away whatever crude they could produce. However, now the Middle East regions have their own refineries and have gradually gained access to sophisticated technology in the field of petrochemicals. Compared to 50s and 60s, their ratio of crude to total exports has gradually gone down.

Same goes for natural resources such as bauxite, iron ore and coal reserves. Technologically more advanced countries, for example, Japan, import raw materials and make end products.

Now coming back to India, whenever I read about exports from the purest iron ore (Bailadilla iron ore) my heart bleeds. Japan is entering into long term contracts for 20-30 years for million on tons of ore.

We have technology to make steel, we have a need, and we have finances to erect steel plants. Than why is the nation allowing these short-sighted politicians to allow such agreements?

The way we are selling (100 million MT per year) we will shortly be begging for iron ore. Though our mines contain one of the largest iron ore deposits in the world, they should be guarded from the flight to other economies, for a more specific domestic consumption.

Developed countries are increasingly looking at less developed ones for supply of natural resources. China’s race and favoritism for sourcing its humungous requirements from countries like Africa are no new stories now.

A heart wrenching proposition would be to export iron ore (the best quality from Bailadilla) to Japan and import processed machineries from them from the same stuff. Is it not shameful? Does it not show that we can not make out steel?

India exports some 100 million tons ore to China alone. Add to that exports directed towards Japan, Korea and others, the figure reaches to roughly 200 mt tons of exports per year. At conservative estimates, these 200 mt will support steel plants of 100 mt capacity.

India certainly needs to review her decision on mining policies and safeguard the interests of scarce natural resources such as iron ore, timber, bauxite, and graphite blocks among others.

At the moment we are making 60 mt of steel (compared to 600 mt in China). Our plan is to make 125 mt by 2020 which requires massive amounts of ore. If we conserve ore, we can cater to our mills for longer time duration.

After writing all this, I would like to add that, to be fair to the miners, the prices of ore depending on iron content, be worked out based on international and competitive pricing basis to keep the industry alive and thriving.

What’s your Say in this Sensitive Issue of Natural Resource Policy?

  1. M Chandra Segar says

    Why the Giovt closed KIOCL Ltd an 100% EOU mining PSU? NO doubt the mine is situated in weatern ghats but the pollution level is negligible when compared to the other mining sectors across India. The Floura and Fauna were well protected at KIOCL, Kudremukh. Now the Pellet plant is starving for quality ore to make pellets. Govt should give a second opinion and make this mini ratna company run and a turnaround in mining induatry.

  2. Altaf Rahman says

    Though its paining to see Indian mineral wealth being sold to outside world as the successive governments will do anything to get few dollars.
    When the clever governments of China and Europe are trying to get as many resources from other countries, we try to copy them only for Oil.

    At least today a positive news was to be found in this topic. NMDC is planning its own Steel Plant of 3 million tons to come up in three and half years. Atleast it will take care of 5 million tons of Bailadilla iron ore. Still the remaining large quantity of ore keeps going to Japan, Korea and China.

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