Captive mines lode under govt scanner

NEW DELHI: The government plans to re-assess mineral reserves in mines already owned by metal companies to determine whether such mines can be released to new entrants that have applied for ore supplies for proposed projects.

If finalised, the move could impact captive mining operations of metal companies such as SAIL, Tata Steel, Hindalco. These companies own mines which were allocated to them decades ago.

“We do not have a record of resources lying in captive mines of metal companies. The states have been asked to re-assess these operations to see that mineral resources are put to maximum use,” mines minister B K Handique told ET. “If production potential from captive mines is much beyond the need of a company, the surplus could be released for allocation to other companies,” he added.

Typically, when a metal company sets up operations, it applies for linkages to mines which are owned by the state. Reserves in such mines sometimes far exceeds the minerals required to feed the company’s capacity.

The mines ministry’s latest plan is aimed at ensuring transparency in allocation of mineral resources and to prevent unused national resources from getting locked in captive mining operations of companies, said Mr Handique.

New companies in the steel, aluminum and copper industries have been facing problems in acquiring land and in getting new mines allocated to them, which has delayed their operations.

Tata Steel has five iron ore leases in Orissa and Jharkhand, all of which are expected to come up for renewal over the next two years.

The government’s re-assessment of reserve potential would also determine whether companies like Tata Steel and SAIL deserve more mines to be allotted to feed their capacity expansions. While the companies have put in applications for more mine allocations, the government hasn’t approved them so far, said a mines ministry official.

SAIL recently got additional mining lease at Rowghat in Chhattisgarh to feed its Bhilai unit. “Our existing captive mines may just be enough to meet the requirements of expanded capacity of over 23 million tones by 2013 and we will need more iron ore for the next stage of expansion,” said a SAIL official who did not wish to be named.

Officials of Tata Steel and Hindalco could not be reached for comments. The government of Jharkhand, which has huge reserves of iron ore and bauxite, has favoured this reassessment. While the thrust has been on re-assessing new mines, state government officials say they are examining if this could be extended for captive mines too.

Mr Handique brushed aside opposition from mining companies. “There are two kinds of mining areas. In areas where minerals have been discovered and the potential is huge, the process of competitive bidding will be followed.

Where minerals have yet not been discovered and further exploration is needed, the license will be given on first-come-first-served basis. No one would be able to jump the queue as is the case currently,” he said. India has 85 billion tonnes of mineral reserves, which are yet to be exploited.