MNCs can't get mines on a platter: States

Urge PM to focus on local value addition in mineral policy and reservation for state PSUs

The chief ministers of five mineral-rich states on Wednesday urged Prime Minister Manmohan Singh for local value addition in the National Mineral Policy (NMP). They also argued that foreign firms must not be allowed to grab control of prized natural resources.

The team consisted of Orissa Chief Minister Naveen Patnaik, Chhatishgarh CM Raman Singh, Jharkhand CM Madhu Koda, Madhya Pradesh CM Shivraj Singh Chauhan and Rajasthan's Vasundhara Raje.

In a joint memorandum given to the prime minister, they stated that the mineral bearing areas are deprived of agriculture and mineral-based industries are the main economic activity in these areas. So, the value addition of minerals within the state should be one of the prime objectives of the NMP 2007.

"It is an irony that the mineral-rich states are the poorest states of the country," the statement added.

Besides, they said, the states should be adequately compensated for use of the minerals through an automatic ad-valorem based royalty structure and should not be left to the discretion of the Central government.

Moreover, the export levy should be entirely passed on to the states. In addition, five per cent of profits from mining should to be set aside for social and economic development.

They also urged the prime minister to recognise the need for continuance of reservation for state public sector units (PSUs) for management and development of certain minerals of national importance.

Only 10 per cent of India's land mass has been explored for its mineral wealth.

ArcelorMittal, the world's No. 1 steelmaker, and South Korea's POSCO and others are looking to expand or begin operations in India to cash in on huge reserves of key commodities and booming demand.

India is estimated to have 2.92 billion tonnes of bauxite, the raw material for aluminium, or some 10 per cent of world reserves. It is also thought to have 23 billion tonnes of iron ore deposits and 276 billion tonnes of coal.

Officials believe it may also have extensive reserves of base metals such as copper, zinc and lead.

The statement, handed to reporters on the sidelines of a major policy planning meeting, said a draft of a new set of mining regulations being thrashed out by the government was flawed as it offered firms a "seamless transition" from prospecting to mining in a bid to slash red tape.

The chief ministers are clearly wary of being shortchanged under the new laws and don't want to see all the raw materials disappear overseas.

"If followed to its logical conclusion, it may result in a few multinational mining companies acquiring control over the vast mineral resources of the country that are essentially required for the domestic manufacturing industry," the statement added.

The CMs also made a plea for a task force consisting of officials of the union ministries and state governments to be constituted for finalising the amendments to the act and rules necessary for giving effect to the policy.

In November, the Supreme Court barred Britain's Vedanta Resources from mining bauxite in forests in Orissa, which had been strongly opposed by tribal groups and activists.

But analysts said foreign investment was crucial for the mining sector, which is dominated by state firms.

"The new mineral policy is meant for attracting investment in the mining sector. Nobody comes here to invest. The present procedure is so complicated it scares investors," said S B S Chauhan, an independent mining consultant and former bureaucrat.

The new policy aims to make life easier for prospectors who will be allowed to sell their information to mining companies. And those who find minerals will not have to apply afresh for mining rights.

Under the current laws, prospecting needs the same number of clearances as a mining operation, even though a lease is valid for just three years, versus 30 years for mining.

State-run agencies lack even basic tools such as well-equipped helicopters which can prospect only at around three metres below the ground, whereas big foreign firms can explore at depths of 300 metres.

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MINERAL BOOST

Chief ministers of five mineral-rich states, in a memorandum to the PM, say local value addition should be one of the prime objectives of the NMP 2007

States also push for the need to recognise continuance of reservation for PSUs for management and development of minerals of national importance

Say draft of a new set of mining regulations being thrashed out by the govt was flawed as it offered firms a "seamless transition" from prospecting to mining

ArcelorMittal, the world's No. 1 steelmaker, and South Korea's Posco, among others, are looking to expand or begin operations in India to cash in on huge reserves of key commodities and booming demand