Calcutta, July 9: The committee on the national mineral policy has proposed sweeping powers to states rich in ore such as Jharkhand and Orissa, despite stiff opposition from Bengal.
Bengal had to wash its hands of a Rs 10,000-crore integrated steel plant of the Jindal group when Jharkhand denied iron ore.
Chief minister Buddhadeb Bhattacharjee took up the issue with Prime Minister Manmohan Singh who assured fair play in distributing resources, especially iron ore.
The committee, set up by Planning Commission and led by its member, Anwarul Hoda, in its report to the Prime Minister’s Office on June 30, said mineral-rich states can give preference to applicants who offer to set up plants in the state.
Although it acknowledges the objections of others, the panel has proceeded with the discretionary powers to states who possess abundant minerals.
The proposal, if accepted, will jeopardise the plans of states having inadequate ore to build steel plants.
The committee discriminates against those applicants who do not want to set up a plant in the state where the mines are located.
The report says a transparent auction/bidding process should be followed in the grant of a lease.
However, it adds that the state government may waive the procedure to promote industries using the mineral.
Sabyasachi Sen, principal secretary (commerce and industry) of Bengal, said the state had no discussions with the committee.
“We are in favour of a national mineral policy which takes into account the requirements of all stakeholders, including states like Bengal,” he said.
Simply put, if the Jindals want to set up a steel plant in Bengal, they will have to bid for a mine as the state has no iron ore deposits.
Jharkhand, Orissa and Chhattisgarh account for 70 per cent of India’s coal reserves and 55 per cent of iron ore, according to McKinsey.
Applicants would avoid the bidding process as it raised the cost of acquisition.
Steel outfits like Ispat or Essar who do not have captive coal mines incur a cost of close to Rs 3,000 a tonne more than the Steel Authority of India or Tata Steel who hold captive leases.
Captive mining of high-grade iron ore reserves, which gives India a low-cost edge, has lured international players like Mittal Steel and Posco and encouraged domestic majors to announce huge expansion plans.
Overall, the report has ignored the objections of Bengal, Maharashtra and Gujarat.
These states are likely to intensify their opposition before the National Mineral Policy is announced by the Centre.
Jharkhand and Orissa have signed multiple MoUs assuring leases to companies, but the opaque policy framework has hindered the proposals.
The Hoda committee has also made suggestions on contentious issues like captive mining, forestry clearance and iron ore export.