Following are excerpts from the Economic Times report on this:

A GROUP of ministers (GoM) on Friday cleared the National Mineral Policy that retains the freedom of mining companies to export iron ore without restrictions on quantity or quality. …

The decision also clears the cloud over Posco’s proposed steel project in Orissa that has proposed to export some portion of ore from its captive mines. The company has proposed the exports to enable it to import high-grade ore required for mixing.

However, in order to facilitate value addition within the country and boost steel production, the new policy has given more powers to the state. The state governments will be able to give preference to companies undertaking value addition within the state while allotting iron ore mines. This will mean standalone mining activities will be disincentivised. However, the entire country will be treated as one economic region and states will have to permit transfer of ore outside the state if no one is willing to put up a plant there.

Moreover, the GoM has decided that a balanced policy will be followed while granting captive iron ore mines to steel companies. The policy will, therefore, provide captive mines to all steel units in operation up to July 2006 . It will also benefit the states as under the new policy, the present system of specific rate royalty will shift to ad valorem rate of 7.5%. Once notified, the proposal will increase royalty earnings by almost six times. For example, royalty earnings from iron ore of five ore producing states work out to Rs 250 crore. This will increase to Rs 1,250 crore under the new regime.

However, the new policy will also clip some of the powers of the states. The states sitting over mining applications of companies will be penalised as delays will transfer their powers to the Centre.

Another important aspect of the new policy is that a process of competitive bidding can be initiated for allocation of captive coal blocks. This is presently done by a screening committee within the coal ministry. The bidding process will also be started for all other major minerals.

Besides, the government will auction mining areas where full prospecting has to be done. This will require amendments to the Mines and Mineral (Development & Regulation) Act, 1957, that is likely to be introduced during the monsoon session of Parliament.

Under the new policy, companies will have to earmark 3% of turnover for undertaking rehabilitation and resettlement of displaced people under a sustainable development model. However, the ministry of environment and forests will work out fresh guidelines separately to introduce environment-friendly mining practices in the industry.