NMP 2019 to benefit K’taka mining sector

The new National Mineral Policy (NMP) was approved by the Union cabinet on February 28, 2019, and was notified by the Ministry of Mines on March 12, 2019. The National Mineral Policy, 2019, replaces the National Mineral Policy, 2008, just after the deadline by the Supreme Court in writ petition 114/2014 filed by Common Cause in the Odisha mining matter.

Though the outdated National Mineral Policy, 2008, was first directed to be revised by the Hon’ble Supreme Court in Odisha mining matter, the revamp of the same became essential when the Supreme Court in October, 2018, did not accept the request of Union of India to leave the regulation of mines and capping to the
Ministry of Mines and Ministry of Environment, Forest and Climate Change (MoEFCC) on an application related to cap on Karnataka iron ore industry, on the ground that the revised National Mineral Policy was still in draft stage and will be considered only when notified.

Therefore, the NMP 2019 expects that, with shift in policy, the mineral production in India will increase by 200% in the next 7 years and will aid to reduce trade deficit in mineral sector by 50%. The New National Mineral Policy emphasise that a long term export-import policy for the mineral sector should be formulated to provide stability for investing in large scale commercial mining activity.

Sustainable growth

The National Mineral Policy for the first time has also proposed to institutionalise the mechanism for ensuring sustainable growth of mining sector; and an inter-ministerial body under Ministry of Mines to decide the state-wise or region-wise annual production.

The revised National Mineral Policy which aims further transparency, better regulation and enforcement, balanced social and economic growth and sustainable mining practices, is touted as a game changer for Karnataka iron ore industry which has been functioning under the direct supervision and regulation set up by the Supreme Court.

The Karnataka mining fraternity is hopeful that provisions in the policy, especially the inter-ministerial mechanism for fixation of cap and long term export-import policy will alleviate their misery. At present, Karnataka is the only state where iron ore production is rationed district wise and further mine wise which has remained constant for 7 years before marginally increased by 5 MT in Dec 2017. Karnataka is also the only state from which iron ore cannot be exported, when no such prohibition is in place for any other states.

The policy is notified in a time when Karnataka chief minister has written to the prime minster requesting intervention to restrict import of iron ore into the state. The state has estimated that it has lost around Rs 600 crore as royalty as the iron ore lessees, who have no alternate market, reduced price to liquidate stock pile up.

The mining companies and steel industry are at logger-heads in the Supreme Court over sale process followed in Karnataka under the aegis of the court.

Export of minerals

On the other side, if you look at the pelletisation market in Karnataka, it is currently operating only at 75% of utilisation. Despite the huge pile up of unsold inventories of iron ore, due to export of pellets produced using Karnataka origin not being allowed, the pellet makers, particularly the PSU KIOCL is forced to import iron ores from Brazil which is hugely carbon and economic negative. Now that the new policy also encourages the export of minerals in value added form, the industry is looking for a systematic change so that it can operate to maximum production.

Overall, the mining industry hopes that the new policy would enable to come out of their disadvantageous position and will equate it to be on par with the rest of India. The policy holds key to almost all the issues that are currently hindering the growth of Karnataka iron ore industry.

Importantly, as it aims to grant industry status to the mining activity, if it is put into practice in the right way, it will, undoubtedly, boost the growth of the mining industry as well as the economic condition of both the state and the country.

Having said this, now the onus lies on the Ministry of Mines and the state government to swing into action to translate the vision into mission and reshape the struggling industry.

(The writer is former Chairman and member of Federation of Indian Mineral Industries (FIMI) South)