The Hindu Business Line : Iron out ore differences

The Steel Minister, Mr Ram Vilas Paswan, stirred a hornet's nest recently by recommending at once a ban on export of iron ore and pitching for a long-term national policy on the mineral. The controversy surrounding the desirability of continuing such exports has once again taken centre-stage, with steel producers and ore exporters pitted against each other. While the steel lobby perceives in the Minister's statement an opportunity to invoke export curbs, ore exporters are upset that their business prospects are threatened.

Such conflict of interest and fluctuation of fortunes are not new for this sector. Indeed, most businesses face the tricky task of reconciling the seemingly irreconcilable interests of producers and consumers. But in the case of iron ore, what beats one is the internal contradiction in the Minister's stance as also the haste with which a policy recommendation is made with no evidence of any serious application of mind. To be sure, the Minister is right in seeking a long-term policy on iron ore, and without doubt, it is a precious wealth whose supplies should be leveraged to maximise national benefit. India's growth story is beginning to unfold. Steel and, in turn, its raw material iron ore are integral to the country's economic development. Housing shows robust growth; yet, serious shortages exist. Infrastructure (ports, roads) is woefully inadequate. Huge investments are flowing into construction and infrastructure (including Bharat Nirman) where activities are expected to gather frenetic pace over the next several years, enhancing the demand for steel, and hence the need to conserve iron ore.

Yet, it would be churlish to ignore the need for continuing with iron ore exports, not only because of the economic benefits generated, including employment and foreign exchange, but also because the domestic steel industry is not ready to absorb all the ore mined. That about half the total ore produced (175 million tonnes) is exported well demonstrates the level of current domestic demand (85 million tonnes). Therefore, the Minister's recommendation of a ban on export ignores the ground realities. Yet, it would be imprudent to continue merrily exporting humungous volumes of iron ore year after year and accelerate depletion of reserves.

The way forward would be a deliberate slowdown in exports in sync with the expansion in domestic demand. Without succumbing to lobby pressure and without further delay, the policymakers must prepare a roadmap for the next 10-20 years taking into account ore production, steel industry demand and export surplus. The future mining potential and quality of ore for domestic use and for export are other factors. There should be adequate stakeholder consultation in shaping national policy. Sans such a policy, it is inappropriate that those in power should make hasty recommendations.

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