Narendra Singh Tomar , Union Minister of Steel & Mines, Govt. of India

India depends on its metal and mineral resources for accelerating the much-required economic growth. However, the country has somehow not been able to capitalise on its rich mineral reserves. Production is much below par and India is still dependent on imports of several minerals. The Dollar Business caught up with India’s Union Steel & Mines Minister Narendra Singh Tomar, to figure out how he plans to bring the beleaguered sector back on track. Excerpts from the interview...

Interview by Ahmad Shariq Khan | March 2016 Issue | The Dollar Business

TDB: Can you give us a sense of the present status and capacity levels of steel production in India?

Narendra Singh Tomar (NST): India is currently the third-largest producer of crude steel in the world as against its 8th position in 2003 and it continues to maintain its lead position as the world’s largest producer of Direct Reduced Iron (DRI) or Sponge Iron. The steel sector contributes nearly 2% to the country’s GDP and employs over 6 lakh people. The per capita consumption of total finished steel in the country has risen from 54.9 kg in 2010-11 to 60.8 kg in 2014-15.

With regards to production, I am pleased to say that the capacity for crude steel production expanded from 80.36 million tonnes per annum (MTPA) in 2010-11 to 109.85 MTPA in 2014-15 and crude steel production grew at 6.2% CAGR from 70.67 MTPA in 2010-11 to 88.98 MTPA in 2014-15. Also, production for sale of total finished steel (alloy and non-alloy) stood at 92.16 million tonnes during 2014-15, as against 68.62 million tonnes in 2010-11, registering an average annual growth of 8.7%.

We have already witnessed that real consumption of total finished steel (alloy and non-alloy) has grown at a CAGR of 5.3% during the last five years. Domestic real consumption of total finished steel (alloy and non-alloy) was at 76.99 million tonnes in 2014-15 and increased by 3.9% on a year-on-year basis (i.e. over 2013-14), likewise, export of total finished steel (alloy and non-alloy) during 2014-15 stood at 5.59 million tonnes while import of total finished steel (alloy and non-alloy) during the same year stood at 9.32 million tonnes.

TDB: Tell us about your recent endeavours aimed at enhancing the trade potential of the steel sector?

NST: In order to further develop the steel sector, we have initiated various programmes. These include our Central Public Sector Enterprises (CPSEs) scheme, under which we have undertaken modernisation and expansion plans to enhance the crude steel capacity of public sector steel enterprises. Under this, we have expanded the Rourkela Steel Plant of SAIL (Steel Authority of India Limited) on April 1, 2015. The expansion has resulted in an addition of about 2.5 million tonnes of crude steel capacity. Also, we undertook expansion of SAIL’s IISCO Steel Plant (ISP) at Burnpur on May 10, 2015. The expansion of ISP, completed at a cost of Rs.16,000 crore, has resulted in a three-fold increase in the hot metal production capacity from 0.85 million tonnes per annum to 2.9 million tonnes per annum. NMDC (National Mineral Development Corporation) has completed the construction activities of 1.2 MTPA pellet plant in Donimalai, Karnataka. Integrated load trials have started.

Further, Steel Research and Technology Mission of India (SRTMI) is being established to spearhead R&D activities of national importance in collaboration with steel industry with an initial corpus of Rs.200 crore. Memorandum of Agreement (MoA) has already been signed on April 6, 2015. These projects should soon start showing results.

Also, in order to achieve the growth target of production of 300 million tonnes of steel by 2025, a concept of special purpose vehicle (SPV) has been proposed with respective State Governments of Chhattisgarh, Odisha, Jharkhand and Karnataka.

TDB: The Mining Ministry has recently signed several MoUs with various states. Can you please elaborate?

NST: Yes, we recently signed many MoUs with various states in the country. These include one MoU that was signed between the Government of Chhattisgarh, NMDC, IRCON and SAIL for 140 km rail line between Rowghat and Jagdalpur with an estimated project cost of Rs.2,000 crore.

Another important MoU with the same state, SAIL and NMDC is for a 3 MTPA capacity steel plant with an investment of approximately Rs.18,000 crore. At RINL (Rashtriya Ispat Nigam Limited), a trend-setting project to generate power with green technology in collaboration with NEDO of Japan has also been successfully commissioned – it’s going to be the first of its kind in the country. Additionally, Ministry of Steel has entered into a strategic partnership through an MoU with Ministry of Skill Development and Entrepreneurship for facilitating skill development through CPSEs of the Ministry. SAIL, RINL & MOIL each signed MoUs with National Skill Development Corporation for skill development.

TDB: Recently, the Ministry amended the Mines and Minerals (Development and Regulation) Act (1957). So, what benefits are you envisioning here?

NST: Yes, we have amended the MMDR Act, 1957 by the new MMDR Amendment Act, 2015 w.e.f. January 2015. Through this amendment, the Central Government has replaced the first-come-first-served/discretionary mechanism for grant of mineral resources by a transparent and competitive auction process. This will allow states to obtain an enhanced share of the value of mineral resources. Provisions have been made to ensure certainty of tenure and easy transferability of mineral concessions.

In order to implement this policy, relevant legislations like Mineral (Evidence of Mineral Contents) Rules, 2015 and Mineral (Auction) Rules, 2015 have been framed and notified by the Government. Also, Model Tender Document (MTD) has also been made available to the state governments to facilitate them to commence auction. As of now, Gujarat, Rajasthan and Maharashtra have issued NITs (Notice Inviting Tenders) and we believe other state governments like Karnataka and Chhattisgarh are likely to follow suit soon.

TDB: What is the objective behind the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY)? How does the Ministry plan to take it forward?

NST: Prime Minister Narendra Modi highlighted the under-development of mining areas as an issue of grave concern in his last Independence Day address. Following up on this, we have launched the Pradhan Mantri Khanij Kshetra Kalyan Yonaja (PMKKKY). The programme is meant to provide for the welfare of the people affected by mining-related operations. We know the fact that the most productive mining areas in the country are largely areas inhabited by scheduled tribes. These productive mining areas are also mainly located in the areas covered by the fifth schedule of the constitution. The PMKKKY is therefore focused on safeguarding the health, environment and economic conditions of the tribals and providing them with opportunities to benefit from the vast mineral resources that are extracted from the areas where they live.

As I see it, the overall objective of PMKKKY scheme will be to implement various developmental and welfare projects and programmes in mining affected areas, and these projects and programmes will be complementing the existing ongoing schemes and projects of the State and Central governments. The idea is also to minimise and mitigate the adverse impacts, during and after mining, on the environment, health and socio-economics of people in mining districts. The scheme will be implemented by the District Mineral Foundations (DMFs) of the respective districts using the funds accruing to the DMF.

TDB: Under National Mineral Exploration Trust (NMET), there seems to be a renewed focus on accelerating mineral exploration activities in the country. Can you please throw some more light on this?

NST: In line with the Mines and Minerals Development and Regulation act (MMDR) Amendment Act, 2015, emphasis is being laid on intensifying mineral exploration activities in the country to bring up the mineral deposits to a mineable stage. The government has opened up the arena of exploration to other agencies and has, accordingly, notified five Central PSUs to carry out prospecting operations without obtaining prospecting license.

The Geological Survey of India (GSI), primarily engaged in regional exploration, has been re-entrusted the work of taking up detailed mineral exploration at G2 and G1 levels of United Nations Framework Classification for Fossil Energy and Mineral Reserves (UNFC) from 2015-16 onwards. Also, Mineral Exploration Corporation Ltd. is being strengthened to intensify its detailed exploration activities by carrying out exploration of the deposits identified by GSI. These initiatives are expected to give a huge boost to the mineral exploration initiatives of the government.

TDB: The Centre had revised the rates of royalty for major minerals in 2014. How has it benefitted the states?

NST: We believe the revision in rates will bring in increased revenues to the states. State governments, which receive 100% of the royalty, have gained through this increase in rates of royalty for major minerals. For some of the states, this revision in rates of royalty may have resulted in an increase of more than 45% in royalty revenues.

TDB: Production to reserve ratio (PRR) in India is a meagre 0.002. This is insignificant compared to countries having similar or even less resources. The fact is India, despite being recognised as a nation well endowed in natural mineral resources, still remains one of the most under-explored countries in the world. Are there any efforts to change the status quo and turn the Indian mining sector around?

NST: We are aware of this reality and are working to address the issue. In keeping with the priorities of the Central Government for national development, plans for accelerating the geochemical and geophysical mapping of the country have been prepared. We are working on the National Geochemical Mapping (NGCM) and the National Geophysical Mapping (NGPM) programmes of the Geological Survey of India (GSI). We believe NGCM and NGPM programmes will have a significant impact in the exploration of mineral deposits besides other geo-scientific activities. Accordingly, the core areas of the identified Obvious Geological Potential area of the country are envisaged to be covered by NGCM within the next two years, and by NGPM, within the next three years. It is expected that with this, mineral exploration in the country will get a huge boost.

TDB: The Centre has notified 31 minerals as ‘minor’ minerals and delegated the entire regulation for these minerals to the states. How will empowerment help the states?

NST: This will enable states to frame their own rules for grant and regulation of these ‘minor’ minerals. States are also enabled to prescribe the method for grant of mineral concessions, rates of royalty, contribution to DMF, etc., for these minerals.

We believe all these new changes will further empower the states across  the country. This will help the entire Indian mining industry to flourish.