National Mineral Policy 2006 - Department of Mines

7.45 Finally, the argument presented is that steel makers with captive mines add muchgreater value than stand alone miners. A basic reality is that iron ore cannot be used for anypurpose other than steel making and its intermediates like pig iron and sponge iron. Standalone miners must also sell their product to steel makers and pig iron and sponge ironproducers. These steel makers and sponge/pig iron producers add the same value as the steelmakers with captive mines. In evaluating the value addition argument, the comparison has tobe of like with like. The value added by stand alone miners has to be compared with the valueadded by captive miners in their mining operations only and not in their steel makingoperations. The value added by steel makers with captive mines has to be compared with thevalue added by the steel maker without captive mines and not with stand alone miners. Fromthis perspective, there does not appear to be any rationale for reserving iron ore mines forcaptive operation.7.46 From the above discussion, the Committee concludes that a case has not been madefor allocation of iron ore mines to the steel plants for captive mining. The example of thesteel mills in East Asia and the mills in India that do not have captive mines show that captivemining is not a prerequisite for efficient production of steel. A thriving steel industry does notneed to rely on captive mining. However, captive mines are a reality in India, and many ofthem are run efficiently. At the same time, there are benefits that large-scale stand alonemining can bring that the country cannot afford to ignore, such as induction of advancedtechnology in exploration as well as optimum mining operations. It would be in the country’sinterest to have a mining regime in which space exists for both captive and stand alone mines.FINDING THE MIDDLE GROUND7.47 In the light of the discussions above, the Committee would recommend the following:1. Stand alone mining and captive mining should continue to co-exist in the country.The position should be reviewed in 2016–17 in light of the emerging situation ofestablishment of steel capacity in the country, on the one hand, and accretions tothe level of iron ore resources in the country, on the other. A view can be taken atthat time on whether the balance of advantage in the grant of LAPL/PL/MLshould be changed in favour of steel mills.2. Through appropriate changes in Section 11(3)(d) it should be clarified that in asituation of multiple applications for grant of iron ore LAPL/PL/ML, the existinginvestment in steel plants that have exhausted their current captive mines should159