Govt body moots long-term iron ore supply pact for steel projs

A government body has suggested joint ventures (JVs) to take care of long-term supply linkages for iron ore in a bid to fast-track setting up of steel plants in India.
The government's consultancy arm, MECON, also recommended a review of issues in the Land Acquisition (Resettlement and Rehabilitation) Act (LARR Act), 2013, which makes acquisition of land difficult and leads to cost escalation.
"A two-tier framework should be instituted, that is formation of JV for long-term supply linkage of iron ore to prospective steel producers and setting up of large capacity steel projectsin SPV (special purpose vehicle) mode through competitive bidding route," MECON said in a report.

This will help fast-track development of the steel and mining sector in India through speedy land acquisition, resettlement and rehabilitation (R&R), statutory clearances and securing ore and water linkages, it said.
MECON's recommendation comes against the backdrop of Odisha suggesting to steel giant Posco in August this year a joint venture with Odisha Mineral Corporation for a long-term agreement for steady supply of iron ore. Posco is yet to respond.
The steel major has put on hold its plans to set up an integrated steel plant with a potential production of 12 million tonnes per annum (MTPA) in Jagatsinghpur district in Odisha, the largest FDI in India so far.

The proposed project has been stalled for about a decade due to various regulatory hurdles, including delays in land acquisition and mining leases.

The report prepared by MECON looks at infrastructure requirements and other issues to help India achieve the vision of 300 million tonnes of steel production by 2025.
India's total installed crude steel capacity is 98.3 million tonnes (mt), of which 68 mt is concentrated in the eastern region.
"The steel sector has to grow at around 10 per cent per annum to achieve the target of 300 mt over the next 12 years. This is a challenging task," the report pointed out.

India needs to address issues and challenges relating to demand (both domestic & export), consistent GDP growth of over 8 per cent annually, long-term raw material security, technology, environment management, R&D infrastructure and logistic support and trade policy issues, among others, it added.
On land acquisition, the report suggested: "The LARR Act, 2013, needs to be reviewed to relax relevant issues that may lead to difficulty in land acquisition along with higher incidence on cost of its acquisition."
It has recommended that the government frame detailed rules based on the Actand that project affected persons' criteria for loss of primary source of livelihood needs to be clearly defined.