National Mineral Policy 2006 - Department of Mines

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also be a consideration. However, the applicant must independently qualify underother criteria, including Section 11(3)(a) relating to prior experience. This isnecessary to ensure efficient mining.3. Existing captive mines should be renewed if they have complied with theconditions of the lease and the life of the steel plant so warrants taking intoaccount existing and planned capacities. In the case of new capacities, therecommendations of Chapter 5 will apply.4. Steel making capacities already in existence on 1 July 2006 that do not havecaptive mines may also be given preferential allocation of adequate iron orereserves within the state without the need to go through the process oftender/auction, as a one-time measure to provide a level playing field. Theseexisting steel companies would have to enter into tie-ups with experienced miningcompanies so that they become eligible in terms of Section 11(3)(a) of the MMDRAct. Due regard should be given to the size of the steel making capacity whenconsidering allocation of a specific ore body.5. Scientific and vigorous prospecting in the country should be encouraged. LAPLsand PLs for magnetite may be freely given to both stand alone and captive miners,whether Indian or foreign. LAPLs for haematite may be given only after strictlyensuring that GSI or another state agency has not already done the requisiteexploration.6. Captive iron ore mines allotted to steel makers should use the ore from thesemines for their own steel and should not sell the same either in India or abroad.RESTRICTIONS ON THE EXPORT OF IRON ORE7.48 In the current EXIM policy, exports of higher grades of iron ore (above 64 per cent Fecontent, whether lumps or fines) are canalised through a State Trading Enterprise, theMineral and Metals Trading Corporation (MMTC). Exports of iron ore with lower Fe contentare free and do not need a licence. Exports of iron ore of Goa origin for certain destinations(China, Europe, Japan, South Korea, and Japan) and of Redi origin for all destinations arealso free from export control, irrespective of Fe content. Separately, as envisaged inparagraph 2.11 of the chapter on the General Provisions on Imports and Exports in the EXIMPolicy, export licences are issued by the Department of Commerce from time to time tomining companies, which hold MLs, for direct exports of iron ore of grades above 64 per centFe content. The NMDC, which is a Central PSU under the administrative control of theMinistry of Steel and has been exporting through MMTC, has decided that exports of NMDC160
of higher grade would be under a quantitative limit of 6.8 million tonnes per annum from itsBailadila mines in Chhattisgarh. However, actual quantities made available for exports byNMDC of the higher-grade iron ore have been below this ceiling. These features of the exportlicensing policy are evaluated in paragraphs 7.59 to 7.63 below. First we take up the concernsof the stakeholders in regard to the export policy.7.49 The steel industry in the country is against exports of any category of iron orealtogether, and would like the iron ore resources of the country to be reserved for theexclusive use of the domestic industry in future. Their demand is based principally on twoarguments. First, in their assessment the iron ore resources are limited both in India and theworld. They argue that if iron ore is allowed to be exported India’s limited reserves would getexhausted and thereafter the Indian steel industry would have to depend on importing it fromother countries, and this would not be in its best interest. Secondly, it is necessary to ensureperennial supplies of cheap iron ore to local steel makers because of the multiplier effect ofvalue addition on the economy. The steel plants constitute the core of the secondary sectorand lay down the foundations for industrialisation and urbanisation, with whole townshipscoming into being. They also leverage technology, capital resources, and energy-intensiveindustries. Production of each tonne of steel creates seven to ten times more value additionthan the iron ore used in the process. While there are no forward linkages for the iron oremined for the external market, production of steel creates the highest amount of forwardlinkages in the economy in the secondary sector. Moreover, mining and steel productiontaken together create five times more direct and permanent employment than just miningalone. In terms of foreign exchange earnings, a tonne of steel earns seven to ten times morethan the 1.6 tonne of iron ore that goes into its production. The steel industry also generates10 times more government revenue than iron ore. The steel industry argues that taking allthese aspects into account, it would be better to add value through production of steel withinthe country than to export iron ore. If export earnings are the objective it is moreadvantageous to export steel after adding value to iron ore than to export iron ore.7.50 The mining industry gives its own arguments against any restriction being imposed onthe exports of iron ore. The stand alone miners would like to be able to sell iron ore producedby them at the best international prices. In their view, it is not necessary to ban exports toensure availability of iron ore to the domestic industry. If steel makers are willing to pay theprice at which iron ore is purchased across the world there is no reason for stand alone minersnot to sell the iron ore to the domestic user-industry. If exports are banned the market wouldshrink to about one-third of its current size. This would exercise a downward pressure on the161
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National Mineral PolicyReport of th
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ContentsAcronyms...................
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Annexure 5: Using the GRI Guideline
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GDP gross domestic productGIS Geogr
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UNFCUSVATWCUUnited Nations Framewor
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Introduction1. The Government of In
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issues relate to fund raising by pr
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termination of MLs, lowering of cei
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• In the case of large mining ope
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investment. The work done by GSI co
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mainly for minerals of base metals
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1.21 This situation has changed dra
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absent. A study by the United Natio
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example, a mining major may outsour
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would otherwise remain unexploited
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the policy environment must continu
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‘A thrust is to be given to explo
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In reviewing the MMDR Act, it is ne
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permissible activities in order to
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(i)(ii)(iii)(iv)The current two-tie
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per plan should be significantly hi
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Duration of Concessions1.48 In the
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10,000 sq. km in a state. This has
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(ii)(iii)(iv)The maximum total area
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e obviated if the lease deed is exh
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elinquishment of areas by the lesse
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to give priority to the prior appli
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(v)(vi)(vii)Rules should be prescri
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esponsible for all rights, liabilit
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ut also the revenue generated from
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government at the Secretariat. A le
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Secretary. If the Directorate is in
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(i) All applications for mineral co
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application. A similar website shou
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concerned State Government (or othe
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Further, Rule 7D of the MCR specifi
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mission mode through, inter alia, t
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Chapter 3Forest Conservation and En
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conservation. There are trade-offs
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ICMM AND SDF3.8 The ICMM membership
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higher level. The basic approach is
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(i) To minimize displacement and to
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affected PAPs in the mining operati
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that a well-regulated and responsib
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(iii)Notwithstanding the above, sur
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egard, all ‘forest’ land must b
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Figure 3.1: Procedure for Processin
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should be authorised to grant or re
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formulation and appraisal of the EI
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3.41 Recognising the need to make t
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Figure 3.3: Public Hearing/NOC from
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Chapter 4Infrastructure Needs and F
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4.5 Logistics is the key to access
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Table 4.1: Mineral Production in In
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necessary, therefore, that in infra
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to the ports of Haldia and Paradip
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Connectivity of Major Ports, brough
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(iv)(v)(vi)(vii)At Visakhapatnam Po
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was of the opinion that while the m
Page 120 and 121: such an arrangement, the Ministry o
Page 122 and 123: developed, controlled, and run by s
Page 124 and 125: subject to overt and covert restric
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Page 128 and 129: (iii)parameters laid down in existi
Page 130 and 131: Chapter 6Augmenting State Revenues(
Page 132 and 133: the value addition question conside
Page 134 and 135: In a system of ad valorem rates of
Page 136 and 137: must provide revenues sufficient to
Page 138 and 139: Box 6.1: Methods of Valuation of Ro
Page 140 and 141: Another point to be borne in mind b
Page 142 and 143: ailable, cognisable criminal offenc
Page 144 and 145: e worked out. This should be string
Page 146 and 147: 7.3 Considering the high-risk natur
Page 148 and 149: Table 7.2: Minimum Listing Requirem
Page 150 and 151: (ii)(iii)only. Such funds have not
Page 152 and 153: addition, the minimum post-issue fa
Page 154 and 155: and hence this ore should be conser
Page 156 and 157: miners distort the market for their
Page 158 and 159: 7.22 The current law does not make
Page 160 and 161: is mostly of low grade magnetite. H
Page 162 and 163: Most magnetite findings are entirel
Page 164 and 165: in UK 206 kg, and in China it grew
Page 166 and 167: metres. The use of down hole drill
Page 168 and 169: 7.42 Despite the fact that SME mini
Page 172 and 173: price, reduce profitability, and pu
Page 174 and 175: IMPACT ON DOMESTIC IRON ORE PRICES
Page 176 and 177: 7.58 Export of iron ore fines on a
Page 178 and 179: POLICY ON BEACH SAND MINERALS7.64 B
Page 180 and 181: not contain more than 0.1 per cent
Page 182 and 183: 7.73 On 18 January 2006, the DAE no
Page 184 and 185: with the Centre is mainly to ensure
Page 186 and 187: India enterprise) reported that the
Page 188 and 189: chloride process pigment technology
Page 190 and 191: are disposed of in the mined-out ar
Page 192 and 193: directed to ensure that the AERB/AM
Page 194 and 195: would have to be carefully drafted
Page 196 and 197: ‘In coordination with the Geologi
Page 198 and 199: Exploration Licences• The current
Page 200 and 201: • The fees should be significantl
Page 202 and 203: surveys have been undertaken, the P
Page 204 and 205: automatic until the exhaustion of t
Page 206 and 207: y stating in the MMDR Act that a pr
Page 208 and 209: departmental representative for sec
Page 210 and 211: therefore (under Rule 63A), pass su
Page 212 and 213: • Section 12(1) of the MMDR Act s
Page 214 and 215: o The lessee should not be asked to
Page 216 and 217: again and the State Mines Departmen
Page 218 and 219: • As in the past, no environmenta
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oad and rail, and lack of long-term
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government to the applicants who ar
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next three-year period as well. In
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• Rates of dead rent should be ra
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measure to provide a level playing
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• In respect of three titanium be
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No-I&M-25(3)/2005Government of Indi
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No-I&M-25(3)/2005Planning Commissio
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‘Efforts would also be made to gr
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ecommending amendments to the Act a
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etained as a Prescribed Substance u
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OthersShri Arvind VarmaEx-Secretary
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16. Reserve Bank of India17. M/s Ji
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the RP holders in areas beyond 25 s
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Appendix ERecommendations of the Ex
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(1) Provide proximate and strategic
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technology to enter the Indian stee
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Cross-country Comparison of Mining
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Appendix F (cont.)Country Mining La
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Cross-country Comparison of Mining
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Appendix G (cont.)Country Mining le
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CountryAppendix H (Cont.)Environmen
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AustraliaIndonesia 9 4 Not specifie
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Annexure 1 (cont.)Geologicalenviron
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operations are undertaken over a fa
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B. After Rule 54 of the Mineral Con
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the Central Government to entertain
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applications, could exercise the ju
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We most humbly request that the abo
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Annexure 4The 2002Sustainability Re
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While unique in its coverage and pr
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• facilitate comparability• add
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AssuranceJust as investors look to
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The Guidelines are structured in fi
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There are many aspects relevant for
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- Issues in which community partici
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Annexure 7Royalty Accruals on Miner
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Sl.No.MineralAnnexure 8 (cont.)2003
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Annexure 91 THE SECOND SCHEDULE 1(S
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(v) Group V Coals:(a) Non-Coking Co
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23. Iron Ore:(i) Lumps:(a) with 65
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45. Tin Five per cent of London Met
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International Comparison of Royalty
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Production, Consumption, Exports, a
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