New Delhi: Steel makers on Wednesday welcomed mines ordinance while some core mining firms alleged that unfair treatment has been metted out to them by giving just 5-year lease extension for non-captive mines.
Foreign brokerage firm Macquarie said the ordinance would allow resumption of some closed mines allowing around 35-40 million tonnes of additional production.
The Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 has come into force after President Pranab Mukherjee gave his assent, paving the way for auctioning of mines containing iron ore, bauxite and other minerals.
Steel makers welcomed the introduction of the auctioning system for allocation of mines, but said it would not ensure a level-playing field as they have to pay a price for getting a mine unlike existing mine owners.
"But, we have to compete in the same field. This should not have been done," said an executive in a private sector steel maker. At the same time, he said he was happy as mines would now be allocated in a transparent manner.
Unlike in the coal ordinance where a bidder has to have an end-use unit to make himself eligible for participate in the auction, the mines ordinance does not make it mandatory leaving the door open for traders as well, he said.
"The Mines Ordinance only says that the government may stipulate a condition. This essentially means that it is not mandatory to have an end-use plant to take part in the auction. This will help traders to come into the sector and there would be no value-addition," he said.
Mining firms said they are not happy as the Ordinance entitles only five-year transition period for non-captive mines before the mine is put to auction again while for captive mines the tenure is 15 years.
"Most of the mining industry firms have the non-captive mines. Besides, the Ordinance discriminates, unlike the MMDR Act, 1957, between the public and the private sector miners and between captive and non-captive mines. This is not fair," said an industry veteran.
Macquarie said: "Prices of iron ore in India should reduce with improved production. Big positive for Tata Steel, JSP, Sesa Sterlite, ACC and JSW Steel." However, this could be negative for NMDC, it added.
