Muthuraman: Vocal

New Delhi, Sept. 4: Tata Steel managing director B. Muthuraman has ignited a major controversy over the Hoda committee report, which came out strongly in support of a proposal to allow free export of iron ore, by writing a letter to the plan panel member complaining that “the final report was not circulated to members for ... their concurrence.”

Muthuraman was a member of the high-powered committee set up by the government. Top Planning Commission officials said Anwarul Hoda, the plan panel member who headed the committee, received the letter last month itself.

The letter and the accusation that the report was never sent around for concurrence may be the reason why the Prime Minister's Office (PMO) has ordered the formation of a committee of secretaries to look into the issues raised by the steel industry and the Hoda report.

Muthuraman’s letter states very clearly that he did not agree with the report's view that there was no need to place curbs on iron ore exports. “It is very unfortunate that the report recommends there is no need for any curbs on export of iron ore and that the matter will be revisited after 10 years,” says Muthuraman.

This may well become a talking point when the chief executives of top steelmakers, including Sajan Jindal and Vinod Mittal, call on the five secretaries — commerce, steel, mines, finance and industry — who form part of the PMO panel next Friday.

Planning Commission officials said they tended to agree with the analysis. In several replies to cabinet notes on iron ore exports, these shoguns have propounded the policy that there is a need to impose curbs on ore exports at a time when India’s steel sector is growing at a rapid pace.

“It is also our (Planning Commission's) policy that the government should encourage export of value-added products rather than raw materials,” officials said.

Muthuraman has, however, not touched on this issue. His letter says the Hoda report seems to be grounded in the assumption that iron ore exports would not hurt domestic industry by basing their projections about the future needs of Indian industry on the basis of current consumption. “The recommendations seem based on the premise that there is enough ore reserves to last 100 years, based on current consumption projections,” the letter said.

The Tata Steel boss, the only steel CEO on the panel, has pointed out that the mineable quantity is just 9 billion tonnes of hematite and 6 billion tonnes of magnetite. With the Indian economy growing at 8 per cent, this could last as little as 40 years.

“We have said this before and we reiterate that it is not correct to compare India with countries like Brazil and Australia, which have smaller populations. Countries like China and Russia which have iron ore and large domestic markets do not export iron ore but conserve it for their domestic steel industry,” argues Muthuraman.

The high-powered committee's report comes against the backdrop of multinational steel and mining majors lobbying the government to open up ore exports, buttressing their argument with the assertion that it would help the government earn revenue.

However, domestic steel majors have advocated that exports of scarce resources like high-grade iron ore should be banned in a phased manner.

Their contention is that the $4-billion in forex earnings from iron ore exports could easily be substituted by export of just 4 million tonnes of steel.