The mining ban in Karnataka, transport bottlenecks in Orissa, and a rising pendency of applications awaiting action from various state governments have not augured well for the Indian mining sector. Although the reopening of a few mines in Karnataka could bring some reprieve, issues related to the regulation, taxation and fiscal policy are bound to further stress miners
While the mining industry can be partially held responsible for the current mess and its adverse impact on allied industries, there are examples where the state governments have been accused of creating instability in the business environment. Currently, there are over 40,000 mineral concessions and about 25,000 renewal applications pending with different states. In Orissa, for instance, even a company like Tata has not been given renewal of their mining leases by the state government. “We have a huge reserve in this country, but production is not being encouraged. Instead, imports are being allowed,” says former Planning Commission Additional Secretary L. P. Sonkar. “Not only that, people are even trying to remove import duty. It’s strange,” he adds. In Orissa, there has been violation of environmental law. If production increases beyond the permissible level, there are provisions in the Environmental Protection Act where you can penalise the companies. “But to restrict the movement for people who have not been carrying out operations illegally, like they did in Karnataka, is not right,” says Sharma, referring to Orissa government’s transport restrictions.
As per the data available with the steel and mines department of the Orissa government, in the first quarter of the current fiscal, traders in Joda mining circle (the largest mining circle in terms of iron ore production in the country, accounting for 25% of India’s total output) lifted 57% less iron ore for export purpose over last year’s figure, despite sharp rise in production. Even for FY2012-13, the state government has capped the iron ore production for Joda mining circle at 40 MT. As a result, a maximum of 400 trucks can be allowed in a day to carry material from this circle for the purpose of export.
Even the proposed Mines & Minerals (Development & Regulation) Bill (MMDR Bill) 2011, which wants mining companies to share 26% of their net profit with the local community, has had miners worried for long. They fear that the new profit-sharing formula could well be an end of the road for the industry. Countering the industry’s contention that the proposal to allot shares to project affected persons (PAP) will change the holding pattern of the firm with time and, thereby, is not a workable idea, the ministry has argued, “The concept of allotting the share to the PAP is to inculcate a sense of belonging among them with that mining company. They will be a part of the process by attending the general body meetings of that company.”
The MMDR Bill 2011 laid in the Lok Sabha is currently being debated by the Standing Committee. The bill provides for hefty fiscal burdens on miners in addition to what they already pay to the state governments and other utilities by way of fees, tax, royalty, freight, etc. “The MMDR Bill will ruin the mining industry. With such stringent laws, you will not get any FDI or technology. Domestic firms that invest will also suffer from negative growth and only illegal miners will prosper,” says Sharma. Another major point of contention is states getting full powers of grant of mineral concessions.
While the mining industry can be partially held responsible for the current mess and its adverse impact on allied industries, there are examples where the state governments have been accused of creating instability in the business environment. Currently, there are over 40,000 mineral concessions and about 25,000 renewal applications pending with different states. In Orissa, for instance, even a company like Tata has not been given renewal of their mining leases by the state government. “We have a huge reserve in this country, but production is not being encouraged. Instead, imports are being allowed,” says former Planning Commission Additional Secretary L. P. Sonkar. “Not only that, people are even trying to remove import duty. It’s strange,” he adds. In Orissa, there has been violation of environmental law. If production increases beyond the permissible level, there are provisions in the Environmental Protection Act where you can penalise the companies. “But to restrict the movement for people who have not been carrying out operations illegally, like they did in Karnataka, is not right,” says Sharma, referring to Orissa government’s transport restrictions.
As per the data available with the steel and mines department of the Orissa government, in the first quarter of the current fiscal, traders in Joda mining circle (the largest mining circle in terms of iron ore production in the country, accounting for 25% of India’s total output) lifted 57% less iron ore for export purpose over last year’s figure, despite sharp rise in production. Even for FY2012-13, the state government has capped the iron ore production for Joda mining circle at 40 MT. As a result, a maximum of 400 trucks can be allowed in a day to carry material from this circle for the purpose of export.
Even the proposed Mines & Minerals (Development & Regulation) Bill (MMDR Bill) 2011, which wants mining companies to share 26% of their net profit with the local community, has had miners worried for long. They fear that the new profit-sharing formula could well be an end of the road for the industry. Countering the industry’s contention that the proposal to allot shares to project affected persons (PAP) will change the holding pattern of the firm with time and, thereby, is not a workable idea, the ministry has argued, “The concept of allotting the share to the PAP is to inculcate a sense of belonging among them with that mining company. They will be a part of the process by attending the general body meetings of that company.”
The MMDR Bill 2011 laid in the Lok Sabha is currently being debated by the Standing Committee. The bill provides for hefty fiscal burdens on miners in addition to what they already pay to the state governments and other utilities by way of fees, tax, royalty, freight, etc. “The MMDR Bill will ruin the mining industry. With such stringent laws, you will not get any FDI or technology. Domestic firms that invest will also suffer from negative growth and only illegal miners will prosper,” says Sharma. Another major point of contention is states getting full powers of grant of mineral concessions.
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