Greater control sought for mining companies

Nudrat Alim

September 16, 2009: Sesa Goa Ltd, the only listed private sector iron ore mining company in India, runs more than a dozen iron ore mines spread across the states of Goa, Karnataka and Orissa. In an exclusive interview with Steel Insights, the managing director of Sesa Goa, P.K. Mukherjee, said that Indian mining should be formally given an industry status and fragmentation of mining leases should be stopped.

Having successfully produced 16 million tons (mt) of iron ore in 2008-09, Sesa Goa in an earlier interaction with Steel Insights, had said that it would be hiking its production by 20 to 25 percent in the current financial year. Mukherjee said that the rate of production is largely dependant on the long term vision of the company, as well as certain external factors which affect demand. Out of the 12 mines which are currently under operation, only one has been outsourced as far as operations are concerned, while the remaining are all managed internally by Sesa Goa.

Quality of Goan ore is poorer than iron ore from other mineral rich states of the country. Hence, beneficiation becomes an important aspect. However, currently there are no plans of adding any plant dedicated towards beneficiation at Sesa Goa, added Mukherjee. It would largely depend on which way the demand for lower grade ore moves in the near future.

The reason why beneficiation activities have not received adequate impetus in the country is because the availability of rich grade ore was never an issue. While the large steel companies have captive resources, the others have also been lucky enough to procure good quality ore domestically. Citing the example of Japan, Mukherjee said the Japanese steel industry is one of the most flourishing in the world, despite the fact that it is solely dependant on imports as far as raw materials are concerned. Since there is no dearth of rich grade iron ore in India, the need to focus on low grade ore has not yet been felt.

"Goan ore is more cost competitive, as compared to iron ore from the other states. This is because most of the movement is water-based which is more or less under the control of the mining companies itself," said Mukherjee. In addition to this, port infrastructure in the western parts of the country is far better in comparison to the eastern ports. This results in lesser waiting time, thereby reducing cost and increasing efficiency.

It is a known fact that the Indian mining sector is marred by not only inadequate infrastructure facilities in terms of movement of the minerals, but also archaic regulatory laws. According to Mukherjee, the logistics bottlenecks prevail throughout the country and the situation in Karnataka and Orissa, where the company has its mining operations, is no different. Though industry wise talks are held with the Railways on a regular basis to figure out how best the minerals can be moved, the unpredictability of railway tariff is a serious point of concern. Plans for the transportation of material are drawn well in advance, at the time of booking and the company chooses the best possible option which is available.

Speaking on the latest National Mineral Policy, Mukherjee said that till now none of the points mentioned in the policy have been given legislative clearance. However, once it does come into affect, he hopes that the mining scenario will improve. The mining sector has failed to keep pace with the changing times as it not been regulated properly over the years and has witnessed no major reforms.

Environmental clearances too are not time-bound, which result in unnecessary delays. Recently the Goa State Pollution Control Board (GSPCB) ordered the closure of several mines operating less than a kilometre away from a wildlife sanctuary in the state. The notification was issued to Sesa Goa mines as well. But Mukherjee is positive that the objection raised on Sesa Goa's mining operations would be withdrawn by the end of the month. "In any case mining activities are currently not taking place owing to the monsoons," he added, without giving details on the proceedings so far.

Mukherjee said that in order to make the Indian mining sector globally competitive mining leases should be granted in a manner which would encourage large scale investments towards the development of mining infrastructure. Global mining majors enjoy greater freedom and control on infrastructure operations which are run on a much larger scale. In India too there is a need to provide mining companies with greater control, he concluded.

Source: Steel Insights