Mining policy differences: Tata Steel exits Indian Steel Association

Tata Steel and its Managing Director TV Narendran have severed ties with the Indian Steel Association (ISA) due to disagreements over mining policy.

Narendran was the President of the Association, which has representation from leading steel producers including JSW Steel, SAIL, Rashtriya Ispat Nigam, Jindal Steel and Power, Bhushan Power and Steel, Tata Steel BSL and ArcelorMittal. His two-year tenure was to end in August.

“Tata Steel has withdrawn its membership from the Indian Steel Association owing to various considerations. Accordingly, TV Narendran, Managing Director, has stepped down from his position as its incumbent President,” said a Tata Steel spokesperson.

ISA members had differences over the government proposal to drop the distinction between captive and merchant mining besides reducing the lease term of captive mines to 2025 from 2030, sources said. Tata Steel owns captive mines which were allotted before the auction regime and these will be auctioned after 2025, if the proposal goes through, they added.

Mining auctions

While amending the Mining and Minerals (Development and Regulations) Act in 2015, the government extended the validity of captive mine leases till 2030 and that of merchant mines till March 2020. These mines were to be auctioned after the leases expired.

The government was keen to remove the distinction between captive and merchant mines to attract new players in the latter and encourage steel companies to venture into further value addition rather than investing in captive mining.

Steel companies, which are neck-deep in debt, can move up the value chain for better margins, rather than explore mining in which they have little experience, the sources said.

Iron ore use

The proposal to allow integrated steel producers to divert a portion of iron ore from their captive mines for use by other joint venture entities was also a bone of contention, the sources further said. The government plans to permit steel producers to use an identified portion of iron ore from their captive mines allotted prior to the auction regime for use by their subsidiaries or joint venture companies. 

In the case of a JV, the original lessee of the mine (the company that was originally allotted the captive mine) should hold at least 26 per cent equity in the venture, per the proposal being considered.

Tata Steel has large captive mines spread across Jharkhand and Odisha feeding its plants at Jamshedpur, Kalinganagar and Angul. It also mines ferro alloys such as chromite and manganese for captive use.

In FY19, the company mined 23.3 million tonnes of iron ore and 6.54 million tonnes of coal, meeting 100 per cent and 27 per cent of its requirements, respectively.

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