The Planning Commission has recommended restricting the export of iron ore and to open the Western Ghats for underground mining of manganese assets, to make India a hub for global supply of quality steel in the 12th Plan period (2012-17). Currently, the Western Ghats are an eco-sensitive zone, with no mining accessibility.
This is based on the recommendation of a working group set up by the steel ministry. To discourage exports, the commission (it is yet to give its final report) feels bidding for direct mining concessions should be restricted to existing/prospective steel producers, value adders and mining companies having domestic ore linkages.
An Official said this clause needs to be included in the proposed Mines and Minerals Development and Rehabilitation Act (MMDRA). The Bill, yet to be enacted, proposes open bidding of mining concessions to all.
The plan outlay for the steel ministry has gone up manifold for the 12th plan, to Rs 552 crore as against Rs 118 crore in the last one.
An official close to the development said the new plan envisages to make India as a global supplier of quality steel.
The commission observed the export of steel reached a peak of 5.24 million tonnes (mt) by the end of the 10th plan year, while in the 11th plan, exports registered negative growth. Progressively, India became a net importer of coal.
Further, to optimally utilise current resources, the commission has proposed removal of excise duty on beneficiation of low-grade ore and demerger of existing coal mines from Coal India Ltd (CIL) and to form a separate coking coal company. Official sources explained mining thrust of CIL was mostly on high grade ore and, therefore, demerger would incentivise others to mine and process low grade ore. Beneficiation is a process to upgrade very low grade ore that cannot be used in metallurgical plants, by increasing the iron content.
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Besides, the new plan has proposed a scheme to provide interest subsidy for entities setting up beneficiation and pelletisation plants, which are capital-intensive. The interest subsidy will be a 10-year loan at five per cent interest, spread across 12th and 13th plan period.
The plan has envisaged fund requirement of Rs 2.5 lakh crore for creation of an additional 60 mt. For resource mobilisation, the report has suggested review of steel-related sectoral caps on the banking sector, easing of external commercial borrowing norms and issuance of technology development bonds on the lines of the infrastructure bonds in the new plan period, commencing April.
In the new plan period, demand is likely to grow at a higher annual average rate of 10.3 per cent, as compared to 8.1 per cent in the past two decades. According to the commission’s internal estimate, demand for crude steel is seen at 142.3 mt by 2016-17, as against total supply of 149 mt. Demand of crude steel is estimated at 128 mt, as against domestic supply of 78 mt in 2010-11.