States may get free hand in mine allocation

The Centre is planning to introduce sweeping changes in mine allocations, giving states unbridled power in deciding on the beneficiary for all minerals, except coal and atomic minerals.

According to the new Mines and Minerals (Development & Regulation) Bill, being finalised by the government and likely to be placed in the winter session of Parliament, the central government approval would not be required for mine allocation, which includes iron ore.

India has approximately 23.59 billion tonnes of iron ore scattered over Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa. The move would affect steel companies, as iron ore is a major input material.

Some of the companies like Tata Steel (Chhattisgarh), JSW Steel (Jharkhand) and Essar Steel (Chhattisgarh) bagged prospecting licences for iron ore over the past year. But enormous delay in mine allocation had prompted them and others to scout for resources overseas.

But there are less fortunate projects that have been awaiting mine allocation for the past four-five years. South Korean steel major Posco signed a memorandum of understanding (MoU) with the Orissa government in 2005, but is yet to bag the mines. Tata Steel signed an MoU with the Orissa government for its Kalinganagar project in 2004, but had not been allocated mines.

As of now, the state government grants the lease after prior approval from the central government. The new Act would also have the provision for auctioning the lease.

Sources close to the development said the new Act was being finalised and this was one of the primary changes being planned. The idea was to regulate the sector but move away from controlling the sector. “We will lay down broad parameters and the state will have the powers to grant the lease within the broad guidelines. We want to decentralise the sector,” said a mining ministry source.

The government was inviting comments from the stakeholders and simultaneously holding workshops on the new norms.

The changes have evoked mixed reactions from the industry. Tata Metaliks Managing Director Harsh K Jha said if the lease was granted in a non-discretionary manner by the state and hastened the process, then it would augur well for the industry.

However, public sector companies were more skeptical about the wide powers being given to the state. A top PSU official said these were resources of the central government and should be handled by it.

Jha pointed out: “In some cases, applications had been pending with the central government for many months or even a year.”

There were reservations on the provision for auction from the industry. Jha said it could prevent companies having genuine and not as much resources as other companies from bagging resources.