Steel policy draft proposes bidding for iron ore mines

The draft has projected India's iron ore requirement to increase to 392 MT by 2025-26, from around 200 MT at present.

Last Updated: Feb 07, 2013, 21:01 PM IST

New Delhi: Identifying lack of raw material security as a major hurdle in augmenting steel capacity, the National Steel Policy draft has proposed allocation of captive iron ore mines to producers through open bidding, and putting some mines in a general category for all bidders.

The draft has projected India's iron ore requirement to increase to 392 MT by 2025-26, from around 200 MT at present.

"Lack of raw material security has been one of the major causes for tardy progress of steel capacity expansion... The government will consider to further strengthen the provisions of allocation of captive iron mines to steel producers in a transparent manner through a process of open bidding for all the well prospected mines," the draft said.

The government may further consider putting some of the iron ore mines in a general category open for bidding by all.

The Steel Ministry has sought comments from stakeholders and the public by February 20.

It also said that government will open up all the mining leases held by the steel producers on captive basis, which are yet to be operational and those where no investments have so far been made, for bidding among other steel producers.

"While doing so, it will be ensured that the same lies in excess of the projected requirement of the respective producers for the next thirty years," it said.

The policy draft has pegged the country's steel making capacity at 300 million tonnes (MT) by 2025-26 to ensure a projected production level of 275 million tonnes by then.

At present state governments are empowered to grant mining leases for iron ore mines with prior approval of the central government for grant of concessions.

The policy seeks to replace the existing one that was formulated in 2005, and suggest ways to create an environment conducive for the growth of the industry that is plagued by issues such as land acquisition and raw material scarcity.

In order to ensure raw material security it has advocated restricting exports and has warned that "the country may have to import iron ore in large quantities in the future at the forecast rate of growth of the steel industry. This may jeopardise the long term competitiveness of Indian steel industry.

Given the possibility of early exhaustion of iron ore, the government will consider constituting an inter-ministerial committee to draw a road map for phased reduction of iron ore exports to a moderate level, the draft said.

"While holding a general policy to discourage iron ore exports, the government will actively engage itself in granting iron ore mining concessions in an absolutely transparent manner to draw adequate investment into the area and to ensure finally that there is sufficient mining capacity to feed the growing demand for iron ore within the country," it added.