As the steel industry complains of a shortage of raw materials, the Ministry of Mines has proposed adopting a stick and carrot policy to stimulate iron ore production.
With the Minerals (Other than Atomic and Hydrocarbon Energy Minerals) Concession Rules, 2021, the ministry suggested that the mining leaseholder would still have to pay statutory dues equal to the minimum transmission stipulated in the quarter even if the transmission was minor. In the event that the tenant fails to maintain minimum dispatch standards for three consecutive quarters, “the state government may terminate this lease agreement after giving a reasonable opportunity to be heard.”
The Ministry of Mines also planned to incentivize the tenant to increase production. “For blocks fully explored, there will be a 50% discount in the share of listed revenue, for the amount of minerals produced and sent earlier than the specified date of production as stipulated in the tender document,” the Ministry of Minerals and Minerals (auction) proposed to amend the rules, 2021 .
This step comes against the background of the lack of production and transmission in important minerals such as iron ore in recent times, which not only led to an increase in their prices, but also affected the iron and steel manufacturing in the country.
Bearing in mind the fact that leases granted to about 334 commercial mines including 46 operating mines will be canceled in March 2020, the Ministry of Mines allowed these contracts to be auctioned even before the lease expires and has granted the new owners permission to operate such leases without obtaining approvals and approvals. Required for two years.
However, many successful bidders in operating mines failed to start production even 7-8 months after the auction and the mining leases had been executed in their favor. Moreover, many of the successful bidders who started production, did not maintain the production and dispatch quantity to the prescribed level.
“The failure to operate these mines has led to an acute shortage of iron ore in the country. During the year 2019-20, the production of iron ore in the country as in September 2019 reached 110.95 million tons, while during the current fiscal year (2020-21), the cumulative production of iron ore was Iron as of September 2020 was only 76.01 metric tons, marking a 31.5% drop in production, ”the Ministry of Mines said, justifying adopting the stick approach.
The Ministry of Mines believes that the incentive will encourage the tenant of the fully discovered blocks to operate the mine and start production at an early date, thus increasing mineral production in the country.
“The aim of the amendment is to make minerals available in the market as soon as possible, taking into account that minerals are involved in many industries,” she added, adding that the amendment proposals were proposed based on the recommendations of a high-level committee headed by Niti. Ayuj Vice President.