Industry want flexibility in mineral use under end-use auction

Coal mine
The draft mineral auction rules propose that companies be granted relaxation to sell 10 per cent of extracted minerals in the open market.

But the industry feels this is insufficient to draw the private sector, demanding full discretion over mines and their output.

Production from mines reserved for companies that have end-use plants cannot be used for any other purpose. The Mines and Minerals (Development & Regulation) Act (MMDR Act) makes a distinction between mines meant for captive use and those for outright sale of the mineral.

Vijay Kumar, former Union mines secretary, is of the view that there should be no distinction between the two categories of miners. "The government should not decide how much a company should produce and how the company should use a mineral. Let market forces decide. As long as the mineral is being used in the country, there should be no restrictions. There should only be export restrictions," he said.

Basant Poddar, representative of the Federation of Indian Mineral Industries (FIMI), said the government should not straitjacket production and utilisation from mineral blocks. He did not support export restrictions.

The mines ministry has invited suggestions on the draft Mineral (Auction) (Amendment) Rules, 2017, seeking to amend the Mineral (Auction) Rules, 2015. The ministry has also sought views on the proposed Bill to amend the Offshore Areas Mineral (Development and Regulation) Act, 2002, aimed at introducing transparent mineral auction rules in offshore areas.

Industry body Assocham said the basic objective of the mineral policy should be to enhance mineral exploration activity in the country and to ensure availability of adequate mineral blocks through the auction process to meet the demand of the upstream industry besides promoting skill development in the sector.

"Sometimes a mineral extracted from a block cannot used by the company, in that case the company should be allowed to decide whether to use it, sell it in the open market or export it," Poddar said. This happens when a miner discovers minerals other than the one for which the mine is allotted.

Attracting bidders in auctions in the end-use category is especially important for mineral-rich states like Odisha. The state has so far auctioned three mines. Odisha's Mines Minister Prafulla Mallick had said earlier five or six iron ore mines would be auctioned by the end of the current financial year.

In June, the Chhattisgarh government informed the Union mines ministry that it had identified 11 mines, four bauxite and seven limestone blocks, for auction during 2017-18.

In order to ease rules for captive miners, the Union government amended the MMDR Act to allow transfer of mines that were allotted prior to the auction regime in cases where companies were being sold.

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