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At least two industry bodies have raised questions and written to the Union Ministry of Mines against the proposed plan to push for iron-ore beneficiation (that is upgrading low-grade iron ore to higher grade ones), failing which penalties would be imposed on miners. Penalties include cancellation of mining leases.
Industry bodies say the policy is capex intensive, while the commercial viability of such investments continue to be under question, specially when the metal / commodity cycle remains depressed.
They also contend that fines are steep and harsh, while there is little benefit for those complying with the policy.
In a note circulated on August 12, the Mines Ministry sought comments and suggestions on a proposal “to mandate 80 per cent of the total mineral produced in a year by the holder of a mining lease, which is below 58 per cent Fe grade, to be upgraded through beneficiation to produce beneficiated ore of 62 per cent Fe grade and above.”
BusinessLine has reviewed the notes.
It was also mentioned that “in view of lack of proven technology for low-grade beneficiation in India, incentives like duty-free import of such equipment and no additional royalty on sale of such ore. should be provided”.
Harsh penalties
According to a letter by the Federation of Indian Mineral Industries (FIMI), the Ministry has suggested heavy penalties in case of a shortfall in meeting requirements, even to the extent of cancellation of mining leases, and then goes on to provide a minor “concession of 5 per cent in the rate of royalty on the quantity of low grade ore beneficiated.
The industry body has instead sought a concession of 20 per cent on quantity of annual production of iron ore of all grades, while this benefit may be considered to be extended only to the portion of low-grade ore having Fe content below 58 per cent, which is upgraded to 62 per cent Fe content (and above).
Mandatory beneficiation should be made only for non-saleable ores of below 55 per cent grade, and that too on business requirements, it was pointed out by both the industry bodies.
Ore having an iron content of below 58 per cent and up to 55 per cent “is directly saleable, which the steel / pellet / sponge iron ore plants use by blending with the high grade”.
So beneficiation will primarily be required for iron ore where the iron content is “less than 55 per cent”.
High capex requirements
A one million tonne beneficiation plant needs Rs 1,500 crore of investment. But considering the weak commodity cycle at the moment, such investments are questionable.
Investments will also be needed for land and for tailings disposal, which may not be within the financial capability of small and medium private miners, the industry body noted.
“It is also a matter of conjecture whether even then, 62 per cent Fe purity will be achieved and at what cost,” FIMI said.
Small miners may not benefit
The two industry bodies pointed out that private mines are “generally small, where a lessee will not have the wherewithal and land to install an economically viable beneficiation plant of one million tonnes”. The terms of existing private mines will be over in next 10–15 years, and the time available with them “will not encourage them”.
Similarly, another industry body, FICCI said, many leasees have a mine between 60 t and 150 hectares only, with negligible non-mineralised land within the lease boundary. Such mines cannot set up beneficiation unit in the mining lease area.
Further, beneficiation of low-grade iron ore generates 40-45 per cent tailing, which cannot be disposed in a mine due to Mineral Conservation & Environmental Issues.
“Miners not having the extra land must be facilitated to acquire additional land with necessary clearances. For miners unable to set up their own plants, government must facilitate setting of centralised beneficiation plants for a cluster of such mines, which will pay user charges for beneficiating according to the quantity of ore beneficiated,” it noted.
After 6 - 8 years being taken-up for setting up a beneficiation unit, non-auctioned mines (whose leases expire in 2030) will be left with lease period of 4-5 years only “which may be economically viable for incurring such huge investment for setting up a beneficiation unit,” FICCI noted.
Suggestions were made to operationalise the existing non-operational iron ore beneficiation plants and push for suitable incentive policies.
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