Contrary to competitive bidding proposed in the upcoming mining Act, Steel Minister Virbhadra Singh today suggested that his PSUs like SAIL and RINL should be given preference in allotment of iron ore mines.
"I am a great votary of public sector...SAIL itself is spending Rs 70,000 crore rupees to increase capacity. RINL is investing too. They must have raw material security on long term basis, otherwise the public money on expansion will be infructuous," Steel Minister Virbhadra Singh told PTI.
"So we say for expansion of these public sector companies ...They must have raw material security on long term basis. Otherwise the money we are spending on expansion will be infructuous. It is public money ...Thousands of crores," Singh added.
Iron ore and coking coal are two vital steelmaking inputs. India stands fifth in terms of iron ore reserves but lacks deposits of coking coal.
Steel Authority of India is investing about Rs 70,000 crore to take its annual production capacity to 120 million tonnes by 2012-13 while Rashtriya Ispat Nigam Ltd is augmenting its production line to 6.3 million tonnes from the present around 3 million tonnes at Rs 12,000 crore.
Although SAIL has captive iron ore reserves to feed its steel mills, for its future requirements, it has to compete with other companies for securing rights to mine such deposits, as per the draft mining legislation.
RINL, on the other hand, does not have its own iron ore reserves and is scouting in the country and overseas to secure the same.
"Actually they require more raw material than before so we can not only depend on what we have today in terms of mining leases etc. You see if the requirement of raw material is not fulfilled, all this investment, which is public money we are spending on modernisation and capacity increase will be infructuous," Singh said.
The Steel Minister also said that the PSUs should get such linkages on long-term basis and maintained that state-owned firms are not run by "individuals" but by the "people of the country."
Meanwhile, Singh has now advocated a level-playing-field with respect to proposed 26 per cent profit sharing proposal with the locals. Earlier, he had sought concessions for PSUs in the upcoming profit sharing regime.
"No, there should be a level-playing field in that (profit sharing with people who lose lands to mining projects)," he added.
The draft mining Bill, which proposes competitive bidding for mining leases, is being vetted by a ministerial panel headed by Finance Minister Pranab Mukherjee.