Indian DRI Producers Suggest Equal Premium for Captive Miners to Ensure Level Playing Field

The President of Chhattisgarh Sponge Iron Manufacturing Association Mr Vijay Jhanwar in an official letter to the Secretary of Ministry of Steel, New Delhi suggested equal premium for captive miners to ensure level playing field along with other suggestions for the amendments required in Mines And Minerals (Development And Regulation) (MMRD) Act 1957 and the mining auction rules. This comes after the Government of India sought suggestions from industry stalwarts on MMDR Act.

The letter by Mr. Jhanwar seeks swift decision making by government in resolving the various issues of mine development and production agreement, and mining auction rules, along with some suggestion for major changes to be made in Section 8A, Section 9, and Section 10A2C of MMDR Act 1957. In future such suggestions from major associations will help in smoothing the running operations of plants and improve the availability of iron ore at comfortable rates.

Suggestions given by Chhattisgarh Sponge Iron Manufacturing Association

Section 8A:

There should be no further extension of the mining leases expiring on 31st March 2020.

1. 18A(4) states that "On the expiry of the lease period the lease should be put up for auction as per the procedure specified in the act"

Suggestions -"That the lease should be auctioned prior to the expiry of the lease and if the lease is not auctioned prior to six months of the expiry then it should be extended for a further period of 6 months. This should be continued till the lease is auctioned"

2. Any holder of Mining lease whose lease continues beyond 2020 for captive use should also be asked to pay additional premium as decided by Central Government from time-to-time to maintain a level playing field between the domestic industry.

Section 9:

1. Any mines allotted through auction should not be required to pay royalty.

Royalty is a share of the mineral value which is being paid since the mines were allotted through a non-bidding process. But now since the auction premium goes directly to State Government, so it is already getting a much higher share in the value of the mineral.

Section 10A2C:

1. If the lease has been granted, but not executed for want of statutory clearances, should not be terminated and the applicant should be allowed to process the statutory clearances and the lease should be executed after all the approvals.

The current Act says that the lease should be granted within 2 years from the date of the Amendment Act. But the act nowhere says that the lease had to be executed within 2 years. So it needs clarification and all the applicants who have done prospecting and have been accorded the approval of central government for the grant of mining lease should not lapse and it should also be not time barring for execution of the lease for want of the statutory clearances. They should have the first right of the lease for execution.

Mine Development and Production Agreement:

All the leaseholders irrespective of when the lease is granted should sign an MDPA and the cut-off limit should be 80% for minimum production and below which penalties may be imposed. This will prevent from mining companies forming cartels and operate the lease at lesser capacity.

Mining Auction Rules:

To give a fair chance to the smaller industries the consortium of industries should be allowed to bid. The end user should be restricted to Iron (either though Sponge Iron or Blast Furnace) and SteelMaking only. Pellet plant may be treated as end-use but not for making pellets and exporting the same.

The maximum area which any applicant or any of his group company can secure in auctions in any State should be restricted to 200 Hectares or 1mine in case the individual lease area is above 200 hectares so that there is no hoarding of mineral by large companies or individuals. This rule may be relaxed only after 2025 when the major operating mines are auctioned.