With enhanced iron ore royalty driving the mining sector revenues of mineral-rich states, Andhra Pradesh, which lost its top rank for the first time in 2010-11, is now looking at ways to utilise low-grade iron ore deposits to boost revenues.
Though the state government had earlier roped in a few private players, besides encouraging state-owned AP Mining Development Corporation (APMDC) and NMDC to enter into joint ventures to tap these iron ore reserves, most of these initiatives remained only on paper. One of the reasons for this is absence of any clear policy.
However, feeling the heat from the government for missing the revenue target last year, the department of mines and geology is now pressing for activating the low-grade iron ore segment through a policy that would attract private investments as well as add value.
Stoppage of iron ore mining last year marginally impacted Andhra Pradesh, which is a minor player while hitting Karnataka hard. The two mineral-rich states of Orissa and Chhattisgarh reached the first and second place in terms of mining revenues, pushing AP to the third position, courtesy the hike in royalty.
Revenues from mining grew 64 per cent to Rs 3,230 crore, as compared with Rs 1,965 in Orissa, 49 per cent to Rs 2,461 crore (Rs 1,641 crore) in Chhattisgarh, 31 per cent to Rs 1,110 crore (Rs 842 crore) in Karnataka and 24 per cent to Rs 2,133 crore (Rs 1717 crore) in Jharkhand during the year 2010-11.
Miner minerals
In AP, mining revenues — a significant portion of which comes from miner minerals such as sand — grew only 10 per cent to touch Rs 2,171 crore, falling short of the annual target of close to Rs 2,700 crore during the same period. For the current year, the state government has set a target of Rs 3,000 crore from mining.
According to officials, tapping low-grade iron ore deposits is among the immediate measures identified for increasing the revenues. In a recent review meeting, chief minister N Kiran Kumar Reddy also asked minister and officials to come up with plans for achieving the revenue target.
Mining lease for the 66-million tonne low-grade iron ore deposits in Prakasam district was awarded to Gympex Limited (an APMDC joint venture) four years ago, but it still remains on paper. Now, the CPI(M)-led trade union is demanding cancellation of the lease and wants the same to be allotted to Rashtriya Ispat Nigam Limited (Vizag Steel Plant) for captive requirement.
More locations
The government had also identified four more location for mining and benefication under the collaboration of APMDC and NMDC. These are Kadapa (24 million tonne), Kurnool (30 mn tonne), Chittoor (300 mn tonne) and Karimnagar (16 mn tonne) with a total estimated value of Rs 9,000 crore low-grade iron ore reserves. However, nothing has been done so far.
Some other proposals are mired in controversies due to lack of any transparent policy in granting mining leases, besides political involvement.
For example, the awarding of prospecting licence for Bayyaram mines in Khammam district had run into controversy involving the family members of former chief minister YS Rajasekhara Reddy. This led to the cancellation of the same when K Rosaiah was the chief minister. Similarly, mining in Anantapur district, allotted to Karnataka minister Gali Janardhan Reddy’s proposed Kadapa Steel Plant, was stopped as it was only meant for captive purposes. Operations in Obulapuram mines owned by the Reddy brothers were also stopped as it was alleged that mining was going on in forest lands.
