National Mineral Policy 2006 - Department of Mines

miners distort the market for their (miners’) product by paying less than market prices for theore extracted by them. This shrinks the size of the free market for iron ore and inhibits thegrowth not only of the mining industry but also of the steel industry, which develops alongfundamentally unsound lines based on preferential access to iron ore at cost. They argue thatthis amounts to a hidden subsidy at the expense of the mining sector. It is also argued thatcaptive miners do not normally mine efficiently and only extract the best and most easilyextractable iron ore, leaving low grade ores to go waste. Stand alone miners, on the otherhand, utilise all the run of mines and undertake value addition activities such as calibration,beneficiation, pelletisation, and blending, thereby making the best use of mineral resources.This group argues that iron ore resources are not limited as a number of haematite mineralbelts are yet to be explored in detail and the country also has vast resources of magnetite ironore that can be beneficiated and used, as is done in some other countries, especially in China.Finally, it is argued that stand alone mines or resource companies invest in resourceaugmentation (exploration and prospecting), create their own infrastructure, and have a stakein ecology and community development. In the main, this group argues that in today’s globalscenario it is world resources that matter and not national resources. There are enough ironore resources in the world for steel makers of the future as long as they are willing to payinternational prices. India’s downstream steel using industry will also not suffer because thereis enough steel making capacity in the world and if local steel makers cannot supply atinternational cost then steel can be accessed from elsewhere. Thus, the group argues there isno need to give preferential access to steel makers to iron ore mines. An essential part of thisargument is that domestic steel is being sold at international prices to Indian downstreamsteel users and the benefit of preferential access to iron ore is not passed on to it. Implicitlysubsidised supply of iron ore to steel mills in the country merely covers up otherdiseconomies of some of the major steel makers. The group points out that in most cases,energy supplied to steel mills is also subsidised through captive power plants with assuredcoal linkages at less than the market price. This group is particularly against captive mines tomultinational steel makers.7.20 The fourth interest group is that of the SME sector miners of iron ore, especially inthe states of Karnataka and Goa. For various reasons such as lack of power, water, and otherinfrastructure, these states have not been able to attract steel mills in a significant way and ifiron ore mines are reserved for captive users, as the steel makers have proposed, then themines in these states will remain undeveloped. Representatives of this group, such as the Goa146