The Indian mining industry is finding itself bogged in a catch 22 situation. Even though India has abundant rich iron ore resources – there is hardly any demand from the domestic steel industry, or export markets.
Though the mining lease of a number of them may expire by the end of this financial year – they have huge non-moving stocks to the tune of about 163 million tonnes – which are not likely to be liquidated by 31st March, 2020. A majority of such iron ore mines are located in Odisha and Jharkhand.
Odisha and Jharkhand account for 137 million tonnes (Odisha 94 million tonnes and Jharkhand 43 million tonnes) of the total unsold stocks of iron ore.
The crux of the problem is that such grades of ore are not required by the domestic iron and steel plants which require high grade iron ore with +62% Fe content, while they unsuitable for export because of a phenomenally high 30% export duty on +58% Fe grade.
Such non-moving stocks in the mines is proving to be a major obstacle further impeding the beleaguered mining industry making it next to impossible for the prospective bidders to bid for them without any domestic or export market due to heavy export duty. The solution lies in removal of export duty on iron ore upto 62% Fe content which will reduce the non-moving stockpiles of iron ore lying at mine-heads.
Similarly an export duty – 15% ad valorem is adversely affecting the export of non-metallurgical grade of bauxite particularly from the western coast. As a result, a number of small bauxite mines in Gujarat and Maharashtra have been closed or are operating at very low capacities. The quantum bauxite exports which peaked to 8.91 million tonnes in 2015-16 have plummeted to only about 1.56 million tonnes in 2018-19. Such low-grade non-metallurgical bauxite is unsuitable and uneconomical for consumption by the domestic aluminium industry.
India is one of the countries having rich deposits of beach sand minerals (BSM) which are replenish able as these are placer deposits formed in beach environments by concentration due to the specific gravity of the mineral grains.
A number of private sector companies have been contributing revenue of about Rs. 5000 crores annually and exporting BSM to the tune of Rs 4000 crores annually. However as per the Ministry of Mines notification dated 20th February, 2019, mining of beach sand minerals by private sector has been banned on the pretext that there is illegal mining and only government companies are allowed to mine these minerals. This has led to closure of BSM mines of private sector resulting in job loss of thousands of workers engaged directly and indirectly besides causing adverse impact on downstream industries.
Ironically while India has rich over 319 billion tonnes of coal it is heavily dependent on imports which are increasing significantly year after year in the past few years.
