There will be no iron ore scarcity in the country post March 2020 as about 200 MTPA mine capacity will still be operational and auctioned virgin iron ore blocks will start adding to the production, an industry body has said.
According to Mines and Minerals (Development and Regulation) Act, licences of mines expiring will not be renewed and the mines will be allotted on the basis of fresh auction.
Merchant miners have cited possible shortage of iron in the market post expiry of mining leases and have appealed for extension of leases up to 2030.
However, in a letter to Niti Aayog, Pellet Manufacturers' Association of India (PMAI) has said that leases of mines expiring in 2020 should not be extended.
Licences of 288 merchant mines, of which 59 mines are under operations, will expire by March next and if the auction of the mines is delayed it could significantly affect the steel production, as per a report by rating agency India Ratings (Ind-Ra).
In the letter the PMAI argued that "there would not be any scarcity of iron ore in the country. Post 2020, around 200 mtpa mine capacity will be in operation. The speculation that there will be a crisis like situation if the leases if not granted immediate extension are false and baseless. Balance existing operating leases are capable to meet the domestic requirement.
"In addition to this, operations in auctioned virgin iron ore blocks will start to supplement in the existing production. The auction of operating mining leases can be done in phases."
However, suitable amendment in mineral concession rules 2017 may be made allowing captive miners to sell up to maximum 25 per cent of the total mineral excavated in the previous year in line provision for auctioned blocks under Mineral Auction Rules 2015, it has suggested.
The main tenet of the MMDR Amendment Act, 2015, PMAI said, is to put in place mechanisms for improving transparency in the allocation of mineral resources through auction and obtaining for the government its fair share of the value of resources.
Extension of the leases expiring in 2020 to 2030 for merchant miners would defeat both the purposes, PMAI said.
"The merchant miners are interested more in exports due to very high margins and do not bother for any value addition to meet the requirement of domestic consumer, whereas captive miner make much bigger investment in the end use industry like a steel or pellet plant, generating employment and revenue for the exchequer," it added.
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