The Hindu Business Line : Iron ore blocks: Steel cos want NELP-like policy

Sorting out issues
Meeting of steel producers and State Chief Secretaries to be convened.
Producers will also moot creating a regulator for the mineral sector.
Steel Minister wants allocation of mines to be routed through the Ministry.

Phalguna Jandhyala

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New Delhi, Feb. 25 Major domestic steel producers will be putting a proposal before the Government, at a meeting later this week, to consider auctioning of iron ore blocks in the country.

“The industry feels that the best way for the allocation of the blocks is by auctioning the areas that the Geological Survey of India (GSI) has identified. This will also be a transparent method and give a level playing field to everyone,” an industry source said.

The industry feels that the procedures could be similar for what was done with respect to the new exploration licensing policy (NELP) introduced for the oil and gas sector in 1997.

Even mining giant BHP Billiton, in a presentation to the Government last year, had advocated auctioning of iron ore blocks. The company said that the blocks discovered by GSI should go to the highest bidder and the procedures could be borrowed from the oil and gas NELP reforms.

According to the Steel and Mines Ministries data, of the 261 leases allotted from 2001 till April 2007, 173 have been allotted to merchant miners and 88 blocks to steel makers.

In Karnataka, which produces about one-third of country’s iron ore, out of 39 mineral leases on offer since 2001-02 only two have gone to steel makers while the rest went to merchant miners. In Orissa, out of 33 blocks 26 have gone to merchant miners. Goa, Madhya Pradesh, Kerala and Rajasthan on the other hand have granted leases only to merchant miners. However, Jharkhand and Chhattisgarh are the only two States to have given due weight to value-addition, offering the majority of leases for steel producing companies.

Meeting called

The Union Steel, Chemicals and Fertilisers Minister, Mr Ram Vilas Paswan, has called a meeting of leading steel producers and State Chief Secretaries later this week to sort out issues pertaining to the investment and expansion plans in the sector.

The Minister is also likely to assess the progress made by the domestic producers in implementing their greenfield as well brownfield projects.

The source also said that a couple of producers will also suggest creating a regulator for the mineral sector, especially on iron ore.

The Minister is also understood to have requested the Prime Minister’s Office to ensure that the process of allocation of mines is routed through the Steel Ministry.

Mr Paswan cited the model followed in coal allocation and asked the Government to consult his Ministry before allotment of iron ore leases. “Before granting iron ore leases, the user Ministry is not consulted and allocations, so far, have been made to non-steel makers by most of the States,” he said in the letter to Prime Minister, Dr Manmohan Singh.

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