MAC: Mines and Communities


Published by MAC on 2006-07-14


Chinese inspires Chhattisgarh's new mine policy

Indo-Asian News Service, New Delhi

14th July 2006

Inspired by China, mineral-rich Chhattisgarh has put in place a new mining policy that would ensure value addition rather than mere export of raw material, Chief Minister Raman Singh said here Thursday.

"This would be done either through coal-based power generation or use of iron ore in state-based units," Singh told reporters.

Singh admitted the inspiration for the new policy is China, which does not export any of its high-quality coal but uses it for generating power and creating value for the country.

"If China does not give us its good-quality coal, why should we go in for a one-sided agreement and agree to give them our rich iron ore? The centre will have to agree to this. We are talking in the interest of the nation and not just our state," Singh said.

About 25 per cent of India's iron ore reserves are found in Chhattisgarh, mainly in the hilly pockets of Bastar region.

According to the new mining policy in the process of being implemented, Chhattisgarh has decided there would have to be a greater value addition by the mining companies like state-owned National Mineral Development Corp (NMDC) that holds lease for mines estimated to have 65 percent of the iron ore deposits in the state.

"For the last 40 years, NMDC has been exporting raw iron ore and we have been getting just Rs 18-20 per tonne as royalty. Now we have decided that value addition has to be done in the state so that we get better revenue and the industry gets a boost," said Singh. NMDC has been directed to cut short its export of iron ore from the state by 40 per cent and cater more to the demands of the local industries.

This is being done through a joint venture NMDC entered into earlier this month with the Chhattisgarh Mining Development Corp (CMDC) for opening a new block in Bastar region that has 350 million tonnes of iron ore reserves.

"The iron ore mined from this Block 13 would be processed and supplied to local industries. This could lead to more industries finalising plans to set up operations in the state," said Singh. He disclosed that the state government has also urged the central government to give "royalty on an ad valorem (percentage) basis instead of the tonnage basis" to ensure more revenue for the state. In the case of coal, the state government has framed a new policy for coal-based power plants under which developers would have to give the state 30 percent of the power generated and 7.5 per cent of power at the cost price.

This would ensure that Chhattisgarh gets 30 percent share of the 2,000 MW power generation plans for which memorandum of understanding have been signed including with corporate groups like Tata and Essar.

"The power developers have accepted our new policy and this would mean not only availability of more power at low prices to industries within the state but also an annual saving of Rs 1.2 billion to Rs 1.4 billion," Singh said.

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