Steel companies and mining companies in India have heaved a sigh of relief after the federal government amended the prevailing mining law to permit the “seamless transfer” of regulatory approvals to new owners of operational iron ore mines, the Economic Times reported.
Earlier the week, the government amended the Mines & Minerals (Development & Regulation) Act to ensure smooth transfer of ownership.
The lease of 334 non-captive mineral mines will expire March 31 this year. Of these, 46 mines are operational, 26 of which are iron ore mines.
When the lease expires, all will go on the auction list as per the mining law. However, for some time now there have been apprehensions that the auction round would not be concluded as scheduled.
Many steel companies had expressed worry that there would be an iron ore supply crisis when the lease expired.
Now, with the amendment, the process of operating or even restarting such mines under new ownership will help avoid such hurdles, and has reportedly eased the concerns of a supply crunch from April.
If the amendment had not been passed, the auction in March would have led to a supply crisis, which in turn would have forced Indian steel companies to import iron ore in order to carry on with their steelmaking operations.
As per a government estimate, about 60 million tons of iron ore output will be affected by the expiry of the leases. As part of the March auction, about 15 iron ore leases will be auctioned, totaling 54 million tons.
There were reports in the Indian media before the amendment that, anticipating a potential shortage, Indian steel companies had started to stockpile iron ore. With the amendment, the transfer of ownership of such mines will now be seamless, according to the Indian government.
Briefing media after the amendment, Federal Coal and Mines Minister Prahlad Joshi said the Cabinet had approved promulgation of Mineral Laws (Amendment) Ordinance 2020 to amend Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015.
Meanwhile, speaking to BloombergQuint, former Steel Secretary PK Misra said instead of the 30-year lease, it would be better if the government increased the lease period to 90-99 years.
Such an extension, he felt, would prompt steelmakers to make long-term investments and help them manufacture better-quality alloys.
Such a move, he said, may even attract investments from global companies that have experience in deep-earth mining. India needs to produce high-quality steel in order for companies to make a profit and be competitive.