The Cabinet note prepared by the ministry of mines excludes almost 15 million tonne of steel capacity in India from the access to captive mining of iron ore.
The note, which has okayed the recommendations of the Hoda Committee, with some modifications has said that captive capacity should be allotted to steel makers who have their steel making facilities in the states that have ore reserves.
The Hoda Committee had recommended a large-scale opening up of the mining sector and had urged for creating global norms for mining in India.
According to sources the Cabinet note, prepared by the mines ministry is yet to be considered by the Union Cabinet and is likely to be considered only after the Union Budget. The note has been signed by mines ministry joint secretary Ajita Bajpai Pande and is titled National Mineral Policy 2007.
Steel makers like Essar Steel, Ispat Idustries and the government-owned Rashtriya Ispat Nigam Ltd of Vizag are situated in states that do not have iron ore reserves. The Jindals have around 30 per cent of their capacities in states that do not have iron ore.
Tata Steel and Steel Authority of India Ltd (SAIL) are largely located in iron ore owning states but SAIL’s plants in Durgapur and Burnpur are in West Bengal, which does not have any iron ore.
The total integrated steel making capacity of the country is around 32 million tonne of which around 15 million tonne is with Essar, Jindals, Ispat and RINL.
The policy mandates that steel makers who are based in states that do not have iron ore should depend on independent mining companies for the supply of ore.
The Indian steel makers have been fighting to get captive mining leases but the state governments have also insisted that these companies produce the steel in the states where they mine their ore.
As a result of these almost all steel companies have scampered to sign Memoranda of Understanding with the state governments or Orissa, Jharkhand and Chhatisgarh for setting up steel making units in these states.
The Jindal project, announced in West Bengal also got delayed as the company did not have any access to low cost ore.