National Mineral Policy 2006 - Department of Mines

5.5 The mining industry and the non-mineral-rich states have their own viewpoints. First,setting up an industry is a commercial decision based on a host of factors, of which theavailability of the main raw material is only one. Other factors that are vital include assuredand reasonably priced availability of power, other physical and social infrastructure,proximity to markets, and skilled manpower. In the case of a smelter, for example, power,comprising 60 per cent of the cost, is more important than the mineral. In the case of a steelmill, the availability of coal and filler materials is as important as availability of iron ore. Anentrepreneur will not set up an industrial unit on the sole consideration of the localavailability of mineral resources. The mining industry and the non-mineral-rich states arguethat if the value addition condition is insisted upon there is a good chance of neither themining operations fructifying nor the industrial unit coming up. Secondly, mining activitiesby themselves bring considerable economic benefits to the state in terms of tertiary sectorspin-offs, even in the absence of manufacturing activities. For example, it is estimated thatduring 2003–04, mining provided direct employment to one million persons in miningoperations and indirect employment to about 10 million persons in ancillary activities in thecountry. Such ancillary activities include overburden removal, crushing/grinding,beneficiation and upgradation of ores, sizing and washing, downstream refining,loading/unloading at mines/railway site, truck transportation, waste dump stabilisation,rehabilitation, canteens, rest houses and crèches, housing for mine workers, maintenanceworkshops, watch and ward staff, hospitals/medical facilities, etc. The ratio of direct toindirect employment in the mining sector is 1:10. Thirdly, mining is a full-fledged industry initself, requiring specialisation and expertise. A certain amount of value addition is alreadyinvolved at each stage of mining. One cannot use ore in the form in which it comes out of theearth. Subsequent to extraction, value is added to all minerals in various stages and nomineral can be used in manufacturing without some value addition. In the case of somemetals such as copper, lead, and zinc, where the percentage of metal in the ore is low, it iseconomical to undertake certain operations such as converting the ores into concentrates nearthe mines. It may also be commercially viable to beneficiate iron ore and convert bauxite intoalumina near the mines in most cases. However, it may not always be economical to do thesmelting operations near the mines. If it is not economical to set up an industry locally andthe states still pursue the policy of value addition as a condition for mineral concessions, themineral resources would most likely remain unexploited. Finally, states that are not mineralrichhave argued that mineral resources belong to the country as a whole and should not be113