Auctioning of mines as proposed in the draft MMDR Bill will sound the death knell of the mining industry and it may lead to cartelisation and waste, FIMI has complained to Prime Minister Narendra Modi.
The Federation of Indian Mineral Industries in a letter to the Prime Minister also alleged that framers of the draft Mines and Minerals (Development and Regulation) (Amendment) Bill, 2004, which has been placed on the Mines Ministry's website for comments, are "not aware" of the state of affairs in the mining industry.
"The auction route for the future development of mineral resources as proposed in the Amendment Bill will sound death-knell of the mining industry," FIMI said.
Contending that the auction route was not pursued in any resource-rich country which follows the time-tested principle of first-cum-first-served, FIMI said no country in the world takes recourse to the route as it may result in cartelisation and monopolistic practices.
The auction route may also lead to selective mining while leaving low grade minerals in the ground, wastage of resources and inflate the cost of final product making it uncompetitive vis-a-vis imports.
Aimed at improving transparency in allocation of mineral resources, government has sought to amend existing Mines and Minerals (Development and Regulation) Act, 1957 to introduce competitive bidding through the auction route for iron ore and other minerals.
"We feel those who have framed the Amendment Bill are not aware of the state of affairs of recourse/mining industry and how it operates world over. Otherwise such an amendment Bill could never have been drafted or even conceptualised," FIMI said.
Stating that the framers seem to assume that the country possesses rare minerals not available or produced anywhere in the world, it said ground reality was "entirely different" and what India produced today were abundant throughout the world.
"...What in fact we should have aimed is to search those resources of which there is a scarcity in the country and for which we depend on imports although their geological prospectivity is quite promising," FIMI said.
The framers also seemed to be unaware of capital-scarcity throughout the world and if investment in the Indian resource industry was not attractive enough compared to other countries such as Australia and South America, foreign investors would simply divert to those countries which offer better terms and opportunities, it said.
"We would like to reiterate that if this Amendment Bill is introduced and passed by Parliament in the present form, it will be the end of the development of mineral resource in the country," FIMI said.
