Only at the fag end of the monsoon session of Parliament, the Prime Minister Dr Manmohan Singh while enumerating the disabilities of the domestic economy in identical statements in both houses of Parliament deplored how the country’s exports have been further hit by collapse in iron ore exports. But what he conveniently sidestepped was how the UPA government ruling the country for close to a decade had willfully parted away resources such as spectrum and coal and not taking a serious note of a large-scale illegal mining supervening in mineral-rich States under its own nose. The happenings in the mineral sector were too glaring to get bypassed by the apex court which promptly clamped a ban on mining of iron ores both in Goa and in Karnataka, the principal producer of this important intermediate of the steel industry.

How else could one explain the country’s descent from a star exporter of iron ore of 110 million tonnes in 2009-10 to a pathetic to 18.37 million tonnes in 2012-13, even as they oscillated from 97 million tonnes in 2010-11 to 61.74 million tonnes in the interregnum? In the first quarter of the current fiscal this export was barely 2.50 million tones and the country had been impoverished to the tune of $10 billion by lost foreign exchange even by any conservative estimate because of the trickles to such exports. It is an open secret that 90 per cent of the country’s iron ore exports are low-grade fines that are unused by the domestic steel industry lacking as it does costly sintering processes. So under what plausible factors the authorities remained quiescent from seeking an early appeal to the apex court’s direction banning iron ore exports remains inexplicably odd and outrageous. This is particularly so at a time when the Indian currency is getting battered and debased in value on the back of a widening current account deficit.

To complicate matters, the authorities showed short-sightedness in slapping a hefty export duty of 30 per cent on iron ore fines. Added to this are successive increases in rail freights on iron ore movements which rendered export uncompetitive and unviable option to the mining industry. As if these self-inflicted injuries are not suffice, a House Panel recent report on review of export iron ore policy said by way of a twist and turn ploy that “in view of the free trade of iron ore upto 64% Fe and even exports of higher grade of iron ore, the Government should take immediate necessary policy measures not only to ban the export of iron ore reserves of higher grade but also those upto 64% Fe content which are presently allowed”. More than what meets the eye is the House Committee’s argument that” in view of the limited beneficiation agglomeration facilities in the country, the high grade iron ore with Fe content more than 64% Fe from Balladila, Chhattisgarh which can be used by the existing steel plants should not be permitted for exports”. This type of protectionist prescriptions at a time when the country had made a niche in the overseas markets as a reliable supplier do not gel well with India’s aspirations to be part of the globalization process.

While the need to preserve our ore resources for expansion of domestic steel industry is quite understandable, it should not evoke insular sentiments that could be contested in the World Trade Organization‘s dispute settlements mechanism. It is also interesting to note that till recent past domestic steel industry was mainly using higher grades of iron ore due to their easy availability. But the Ministry of Steel in a note cautioned that there will be rapid demand of iron ore fines by industry as the technology matrix of the various capacity expansion plans and new steel plants is heavily biased towards technologies using agglomerated fines. But this entails substantial investment plans in beneficiation and agglomeration (sintering and pelletization) facilities for availing of the abundant low grade iron ore fines. In the absence of such investments into the appropriate technologies for beneficiation, sintering and pelletization, iron ore fines and concentrates are of no or low value in the country except as a negative environmental externality, according to the House Panel.

Be that as it may, government’s permission to South Korean steel major POSCO to set up a steel plant in Odisha a few years ago which got embroiled in land and tribal welfare disputes was hailed by the Ministry of Steel. The latter in a note to the Committee maintained that the entry of foreign steel companies like POSCO would help in augmenting investments in steel sector besides enhancing the steel production capacity in the country. If that is the attitude of the Ministry in welcoming foreign steel companies, it is rather pathetic that the same Ministry deposed before the Committee pleading for measures to conserve this resource for long- term requirement of domestic steel industry by taking appropriate fiscal measures such as enhanced export duty on ores! Incidentally POSCO once on stream would regularly export iron ore from India for its captive use in its other plants as per the MoU it signed with the government of India.

It is thus clear that there is no serious bid by any major player including political classes to help the domestic industry for making the requisite investments into new technologies to exploit the lower grade fines, though catcalls are frequently being made to ban export of ore or enhance its export duty to impede exports and thereby damage the country’s image as a dependable supplier to the trading partners. Either the authorities should revoke the export duty altogether, allow export of fines of all hues of pre-set quantity to earn the much-needed forex or find the wherewithal to step up investment in beneficiation and agglomeration without further loss of time. Mere waffling and passing from one crisis to another without acting resolutely would result in unpleasant repercussions in terms of denuding the nation of its promising potentials.(IPA Service)