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A WHOLE LOT of issues will have to be sorted out by the Centre and the iron ore producing States if the country is to cash in on the improved export prospects for the mineral highlighted in recent reports on the strengthening global demand, largely because of the China factor. The announcement by Tata Steel of its decision to expand its iron ore business should be seen as a confirmation of those reports. Tata Steel is an established producer of iron ore from its captive mines in Jharkhand and Orissa, and in recent years it has been able to establish its presence in exports on a modest scale. Therefore, it is ideally placed to expand this business and to that end make necessary investments in its mines. But more such initiatives are necessary and that will be possible if the deficiencies of the sector and constraints faced by it are removed.

Rightly, perhaps, keeping the interest of the domestic steel industry in view, New Delhi has been traditionally following the exportable surplus concept with ceilings on export of high-grade ore and canalisation being the key features of the policy framework. But a review of this policy will become imperative before WTO norms, which envisage lifting of quantitative restrictions on external trading in commodities, including raw materials, come into effect. A more important issue for India, however, is how to take advantage of the encouraging export prospects, particularly in the Asian markets including China. Because of geographical proximity, the voyage time is less, which translates into freight advantage. But iron ore mining in large areas is still unorganised, manual or at best semi-mechanised.

State governments have merrily given leases for small areas that cannot allow economies of scale. On top of it, environmental concerns have not been addressed. Further, a large number of leases remain unutilised. A policy framework that facilitates consolidation and setting up giant international scale mining ventures with beneficiation facilities has to be put in place. Simultaneously, the railway network in the mining areas and port facilities have to be augmented. There is also a strong case for further rationalisation of port charges and railway freight. Analysis shows that inland transport charges account for over 50 per cent of the f.o.b. cost, eroding the advantage of the organised sector which is competitive in terms of mine-head ore cost.

With States yet to liberalise their policies, rules and procedures, the host of prescribed clearances still take an unduly long time. Hopefully, the practice of giving leases for captive mining, which is really not provided in the relevant Acts but which was introduced in the early stages of industrialisation as the private sector then had only a token presence, will become a thing of the past. The setting up of a good number of sponge iron and pig iron units in recent years has led to an increase in the domestic demand for iron ore. That a further increase in the domestic demand is likely is borne out by Tata Steel's decision to trade in the mineral locally too. The sector, therefore, must come up in a big way.

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