17/10/2019 - Government Policies | Mainstorming

IAS Parliament 5 years

KEY POINTS

· The mining sector is plagued by lack of a holistic approach, and unpredictable policymaking. The industry contributes 2.5% of India’s GDP, and employs more than a million people.

· The biggest challenge the sector faces is the perception that mining damages the environment.

· Under the new policy, mines are to be auctioned instead of being allocated. This brings transparency, but delays due to absence of clear timelines for conducting auctions results in non-availability of raw material to industry.

· The import of material that India is already blessed with is on the rise, hurting trade deficit and forex reserves. Relooking this approach is crucial to ensure both quality and quantity.

· Ensuring quality coal supply near the point of use is the basic principle to avoid logistical burdens. Currently, Coal India doesn’t necessarily provide industry with coal from the same mine, creating inefficiency in the mineral’s calorie use.

· While it is important to replace imports, ash content in the coking coal available in India is high. Thus, there is need to allocate new coking coal mines in Jharkhand, Odisha and Madhya Pradesh, and also attract technology and investment in washeries to reduce ash content.

· The ash can be used in the cement industry and brick-making. The government is auctioning 21 coal mines for end-use in non-regulated sectors, and six coking coal mines for end-use in iron and steel.

· Delay in amending Section 8A (4) of the Mines and Minerals (Development and Regulation), or MMDR, Act that allows auctioning of mines only on expiry of the lease period will disrupt mineral supply from captive mines.

· This can bring down the steel industry, which is performing well despite the slowdown—any further delay in auctions will disrupt production of ~60 mt of iron ore affecting nearly 40 mt of steel-making.

· To remove cartelisation in commercial mining, it is important to have a minimum production clause. If production up to the environment clearance limit is not possible, this minimum requirement should be imposed on the miners.

· The concerns of environmental degradation have put restrictions of the quantity being mined in Karnataka and Goa.

· Goa produces low quality of iron ore only for exports—modern techniques can help reduce the associated environmental impact.

· The Centre should set up a committee of the steel, mining and environment ministries, and state governments to resolve this issue. The need is to rationalise the approach. The mining, when completed, will result in good forest cover in these areas.