Date:16/04/2007 URL: http://www.thehindubusinessline.com/2007/04/16/stories/2007041603560100.htm

Back Cos with captive coal, ore mines may get nod to sell excess output

Ambarish Mukherjee

May even be compelled to produce to the hilt

Marketing details
Excess coal from the mines could be routed through Coal India Ltd.
For iron ore, NMDC will take the product to the market.
Royalty payment, rights over the mineral etc. would be worked out later.

New Delhi April 15 Companies with captive coal and iron ore mines might soon be allowed to market production in excess of their immediate captive requirement. A proposal to this effect is currently being examined by a Group of Ministers (GoM) on mining policy. .

The proposal envisages that excess coal from the mines could be routed to the market through Coal India Ltd whereas in case of iron ore, the National Mineral Development Corporation (NMDC) will take the product to the market, official sources told Business Line.

The proposal before the GoM emanates from an earlier move in the Coal Ministry to market the excess production from captive mines and this has now been revived to have a similar policy for iron ore as well.

Excess production

In the captive iron ore mines with steel companies and coal mines with steel, power and cement industries, normal mining operations yield a substantial amount of mineral in excess of the respective company's requirement.

In case the GoM approves the proposal to sell the excess production in the market, details such as royalty payment, rights over the mineral etc., would be worked out later, the sources said.

Another important point that remains to be decided is whether the companies having captive mines would be under any kind of obligation to exploit their resources in excess of their requirement so as to meet the increasing demand for coal and iron ore in the country, the sources added.

Contentious issue

Allotment of captive iron ore mines to steel companies has become a contentious issue, with iron ore-rich States insisting that value addition should be done within the State itself. There have been instances of some States refusing to grant mining leases to companies having their operations in other States.

Moreover, there are conflicting views within the Government regarding the mode of allotment of captive mines because of which the GoM was set up and asked to come out with a policy framework.

On the other hand, the Ministry of Steel is of the opinion that auctions should not be the rule but should only be used as an exception.

The GoM, which met last week, went through a presentation made by the Mining Ministry but detailed deliberations could not take place due to shortage of time. The next meeting could be expected to take place around the end of May, sources said.