Rift among ministries over iron ore exports

Bad news for the steel industry. The committee of secretaries constituted to deal with the matter of restricting iron ore exports has referred it back to the government, after failing to secure a consensus from different departments.

The development assumes significance as it implies that the scramble for captive iron mines by integrated steel producers will continue.

According to a draft report of the secretary's committee on export of iron ore, the steel secretary was the only one in support of a ceiling on export of iron ore at the current levels.

He said that it should apply to the whole country except the Goa and Redi regions and there should be a tariff barrier on exports of ore having 62 per cent and above iron content.

The commerce secretary and the department of policy and promotion (DIPP) secretary said that the current policy of canalisation and licensing of 64 per cent iron should continue, while the mines secretary and the Planning Commission felt that there could be a tariff barrier on exports of lumps of 65 per cent iron and above. The finance secretary did not offer any views.

Failing to reach a consensus on the matter, the committee concluded that it should be decided by the government appropriately.

The steel companies had been campaigning for ban on iron ore export, citing that it would thwart future expansion in the country.

Iron ore production in 2005-06 was 165 million tonne, of which 90 million tonne were exported.

The industry's main contention has been that India happens to the be the only country having future growth potential, yet exporting ore.

Estimates suggest with the sustained growth in steel production, 12.5 billion tonne of hematite ore will be exhausted by 2035.

India has approximately 23.59 billion tonne of iron ore scattered in Jharkhand, Orissa, Chhattisgarh, Karnataka and Goa.

Of this, hematite ore accounts for 12.906 billion tonne. The industry is dependent on hematite ore since majority of the 10.68 billion tonne of magnetite ore is found mainly in the Western Ghats, which is ecologically sensitive and the Supreme Court has already stopped mining in the area.

However, the entire estimate of reserves is under cloud since only 6.311 billion tonne is proven reserve and the balance are probable and possible reserves. The industry feels that if export of iron ore is banned then there would be enough ore and the clamour for captive mines could be toned down.