National Mineral Policy 2006 - Department of Mines

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