National Mineral Policy 2006 - Department of Mines

that the requirements of MMTC for exports under LTAs have been met. These licences havebeen freely given, and generally actual exports have been lower than the quantity authorised.7.61 It is clear from the description of the export licence regime given above that it isGOI’s intention to restrict exports of iron ore with Fe content higher than 64 per cent, with aview to ensuring that the exports do not take place at the cost of supplies to domestic steelproducers. Exports of Goa and Redi origin are free because it is not economical to move theore from these origins to the plants in the eastern and central parts of the country. Control onexports of Goa origin to certain destinations is perhaps meant to ensure that theimplementation of LTAs with Japanese and Korean companies is not hampered. However,the Committee feels that if the objective is to restrict exports the means adopted to achievethis objective are not optimal. The MMTC helps smaller exporters of higher-grade iron ore toexport and these quantities escape any government check to ensure that they are surplus tothe needs of the domestic steel industry. Furthermore, the check for ensuring supplies todomestic users is only after ascertaining the current production, which can rise and fall on thebasis of current demand. There is no check against the availability of resources, which isplentiful as shown elsewhere in this report. The policy of canalisation appears to have beendictated primarily to enable implementation of the LTAs. The Committee finds it anomalousthat exports are regulated through a dual mechanism of canalisation as well as exportlicensing.7.62 The Committee notes that the export regime for iron ore of higher grade does notmake any distinction between fines and lumps although, as noted earlier, fines areparticularly in surplus in the country. The rationale for the 64 per cent cut-off of Fe content isalso not clear, as the cut-off in IBM classification is 65 per cent.7.63 In light of the above analysis and particularly the assessment regarding availability ofiron ore resources in relation to current domestic production, and the appraisal of the impactof export controls on the health of the mining industry and its attractiveness for investment,the Committee has concluded that there is no need to impose any quantitative restrictions onexports but that the position should be revisited after 10 years. However, by way of abundantprecaution, the Committee recommends that an export duty may be levied on exports of ironore in lump form with Fe content above 65 per cent. The system of licensing and canalisationcurrently in operation should be discontinued. Also captive miners should not be allowed toexport either fines or lumps. They should sinter the former and use the latter in their ownblast furnaces.167