The Parliamentary Consultative Committee attached to the Ministry of Mines met here today to discuss all aspects of 'Iron Ore' in the country. The meeting was chaired by Minister of Mines, Shri Sis Ram Ola.
The members of the Consultative Committee were informed of the views of the Ministry of Mines that management of mineral resources has to be closely integrated with the overall strategy of development whereby exploitation of minerals is to be guided by long-term national goals and perspectives. In view of the availability of ample resources of Iron Ore in the country (25.25 billion tonnes), the Ministry is of the opinion that there is no reason for concern on raw material security for the domestic steel capacities likely to come up in future. However, there is an immediate need to study and assess the expected increase in the Steel production capacity in India. Further any effort to curb export Iron Ore, without matching domestic consumption for the Iron Ore currently produced in the country, may be inimical to the country's stand alone Iron Ore mining industry, severely affecting employment and economic activity in several of the backward regions of the country where these mines are located.
India is one of the few countries of the world with very large pockets of high-grade iron ore deposits which have been increasing over the years. While current resources are estimated at 25.25 billions tonnes (BT), between 1980-90 existing iron ore reserves rose by 5.22 BT and between 1990-2000 the reserves rose by another 801 million tonnes (MT). Notably, despite having mined 1.65 BT or iron ore between 1980 and 2005, the resources grew from 17.56 BT in 1980 to 25.25 BT in 2005. The new finds actually amounted to 7.69 BT during the period averaging to a little over 256 MT a year. The average production during the last five years in India has been around 163 MT and 2007-08, it was 2003 MT indicating that new discoveries till 2005 having been greater than production.
However, unlike in Australia and Brazil, in India, due to lack of adequate advance in the technology there has been no exploration programme undertaken for locating new deposits of iron ore since the mid 1980s, while the advances in technology of exploration have led to increase reserves in Australia. Regional exploration for iron ore in India was last done between 1984 and 1988 when vast Hematite mineral belts were located in the eastern part of the country. Out of the 14.6 BT of Hematite located on the basis of reconnaissance done, about 7 BT have been converted to Reserves through Detailed Exploration till 2005. However, the complete resources of the country are yet to be identified and the existing resources are yet to be converted into Reserves. The Ministry of Mines is of the opinion that investment in exploration will lead to discovery of new resources and Detailed Exploration will enable conversion of resources to reserves. However, the exploration done for Iron Ore so far has not been very significant. It is estimated that Detailed Exploration has been done in less than 19 % of the Iron Ore Bearing Area and, the resources of Iron Ore in India are likely to increase further upon Detailed Exploration.
There has been a tremendous increase in the production of Iron Ore since 2003-04. While it was 122.84 MT in 2003-04, the estimated production in 2006-07 went up to 180.91 MT. The consumption or Iron Ore too has gone up from 44.97 MT in 2003-04 to an estimated 72.00 MT in 2006-07. Exports in 2003-04 was 62.57 MT which has grown to an estimated 93.79 MT in 2006-07. There has also been a surplus of Iron Ore in the country. The estimated surplus of Iron Ore in 2006-07 was 15.12 MT.
The world average per capita consumption of steel was 149 kg. In India in 2004-05, the consumption per capita was about 30 kg of which the urban consumption was 77 kg and the rural consumption was only 2 kg. It is estimated that the average consumption can rise from 30 kg to 70 kg. by 2020 with continuous growth in infrastructure, increase in rural demand and increase steel production. In which case the Ministry of Mines feels that the policy on exploration of natural resources, including Iron Ore would have to be reviewed. It is also the opinion of the Ministry of Mines that going by current estimates, India will still have enough resources to last up to the end of the century. Being overcautious in exploiting the resources of Iron Ore may result in a situation in which the mineral resource if overtaken by development in technology and is reduced in economic value. Citing the example of Mica, the Ministry has pointed out that India had and has the largest deposits of Mica Sheet (80%) in the world but Mica mines were not developed in the 60s when Mica was in great demand and the prices were high. With 6 different synthetic substitutes of Mica now available, both production (demand) and value have fallen to a tenth what there were in the 60s. The demand having been disappeared India's Mica, is still underground and is of very little value now. The Ministry has pointed that there is already credible talk of Titanium become the metal of the future and replacing steel 50 years from now.
Regarding the export of Iron Ore, the Ministry of Mines has opined that there does not appear to be justification for restricting export of Iron Ore from the perspective of availability or rate of depletion of reserves. According to the National Steel Policy (NSP) 2005, annual export of Iron Ore is likely to grow to about 100 MT by 2020. If this estimation holds good, the depletion of Iron Ore resources, 10 years from now, would only be between 0.8 and 1.0 BT out of the current resources of 25.25 BT.
The Ministry of Mines has pointed out that for a GDP growth rate of above 8 per cent, the mining sector has to grow. After many decades of stagnation, international Iron Ore prices have been at a historically high level over the last two years or so. Thus, this is not the opportune time when India should be putting in any restrictions on export of the commodity. The Ministry is also of the opinion that a ban on the export of Iron Ore would have an adverse impact on domestic prices of the commodity and consequently on the development of Iron Ore mining as a whole. Export account for almost 50 per cent production of Iron Ore. When market shrinks due to export restrictions and limited local demand, prices will fall to the point of marginal profitability leading to the closure of a number of mines. Fall in prices will also lead to deprivation of the plough back surplus of the mining sector, and the lower profits of the Iron Ore mines will drive away investment from exploration and mining.
In view of the fact that the Ministry of Finance has recently imposed an export duty of 15 per cent on ad-valorem basis on all exports of Iron Ore, the Ministry of Mines feels that the country has sufficient resources of Iron Ore, any measures to restrict the export of Iron Ore would adversely effect the Iron Ore mining and the livelihood of about 6 lakhs people employed in Iron Ore mining and in the tertiary sector.
The total production of Iron Ore Fines in 2006-07 was 100 MT against a total production of 181 MT Iron Ore, i.e. 55 % of the total production. The total export of Fines in 2006-07 was 68.38 MT against a total Iron Ore export i.e. 73 % of the total Iron Ore export. The consumption of Fines by the domestic steel industry was only 41MT living a gap of 59 MT. Any effort to restrict production of Fines will also lead to decrease in Iron Ore production. Domestic demand for Fines is only to the extent of the sintering and pelletisation capacity available. If surplus Fines are not exported, they will go waste. If export were further restricted in any manner, its main impact would be on Fines. If Fines are not utilized, they will create environmental problems and hamper mining. The total quantity of Fines would progressively increase in production of Iron Ore. Thus, sintering and pelletisation capacity needs to be progressively increased.
The Ministry also feels that it is national interest to promote pelletisation, calibration, benefication and blending of exports on a large scale to compete with international export market. The Members of the Consultative Committee present on the occasion were Shri Vikrambhai A. Maadam, Shri Tushar A. Chaudhary, Dr. Prasanna Kumar Patasani, Shri Tukaram Renge Patil, Dr. Rajesh Kumar Mishra, Shri Veerpal Singh Yadav and Shri Rudra Narayan Pany.
MC/MK
(Release ID :39814)