MAC: Mines and Communities

An iron grip descends on India

Published by MAC on 2005-08-29

An iron grip descends on India

29th August 2005

Potentially the biggest ever FDI (foreign direct investment) in India's natural resources is pre-figured with a deal that has been rushed through its permitting process with obscene haste.

Benefitting from unrivalled domestic supplies of iron ore, and capacity to forge steel, is one of the world's top three steel conglomerates, South Korea's POSCO. It's been offered concessions which aren't even enjoyed by domestic companies.

On the receiving end are thousands of tribal people who will be forcibly removed from their land.

Central to the murky politicking surrounding the project are the discredited Orissa state government - whose honeymoon with another foreign minerals exploiter, Vedanta plc., may soon come to an end - and an NGO based in the US called International Watch.

This dubious outfit has promised five millions dollars to a "tribal rehabilitation fund" (sic) to resettle the Indigenous oustees. Claiming "deep roots in the US and India" International Watch doesn't disguise its support for the "war on terrorism" engineered by George Bush, who regards South Korea as a firm ally (see "From the Horse's mouth" below).

POSCO deal: uneven playing field?

Source: Special Correspondent, The Hindu

August 19 2005

Orissa's memorandum with Korean steel major POSCO raises disturbing questions.

Iron mining Orissa ore inAlready by 1999 large parts of Orissa's protected
forests had been blighted by iron ore mining. This
photo depicts an area of 900 square kilometres.

Overall concessions to the tune of Rs.120,000 crores Exports of 400 million tonnes envisaged run counter to national policy POSCO offered far greater concessions than in Orissa's MoUs with Indian producers Iron ore commitments may overshoot availability.

The memorandum of understanding that the Government of Orissa has signed with the Korean steel company, POSCO, envisages major departures from the national policy on mining and exports of iron ore and offers terms and concessions not extended to any of the domestic companies that have proposed to set up steel plants in the State.

The memorandum available with The Hindu outlines the nature of the project that will be the single largest foreign direct investment in the country to date. It envisages a 12 million tonne steel plant coming up in Paradeep in two phases with an overall investment of $ 12 billion (Rs.51,000 crores); iron ore prospecting and mining concessions and possible exports; land acquisition and allotment and facilitation in getting clearances. In addition to the steel plant and mining facilities, POSCO would also develop road, rail and port infrastructure including a rail link to Paradeep, an integrated township and water supply infrastructure.

All States vie to secure investments of this type and offer substantial concessions. Yet a reading of the MoU with POSCO reveals that the concessions in this case go beyond all such deals. According to one industry analyst, the virtual subsidy under the MoU would amount in all to Rs.120,000 crores over a 30 year period, raising the question whether the costs would far outrun the benefits, Dabhol-style.

The iron ore mining concession alone would save POSCO Rs. 54,000 crores during the period, being the difference between the mining costs and the market price of iron ore. It would also enjoy substantial tax concessions as, in an unusual gesture, the project area is to be declared a Special Economic Zone. Besides, an investment of Rs. 51,000 crores for a 12 million tonne plant is thought to be on the higher side ; one industry analyst estimates the requirement at no more than Rs. 40,000 crores; even accounting for the costs of developing the port and the rail links.

Secondly, and quite apart from the scale of the concessions, the project envisages a substantial departure from the national policy on mining and iron ore export. POSCO has sought 400 million tonnes of iron ore to be exported for the use of its steel plants in South Korea which runs contrary to the current policy. The Government of Orissa has said it "will assist POSCO in establishing suitable contacts and interfaces with the Government of India for this purpose."

Iron ore exports have risen substantially in the last two years, a trend that is worrying steel industry analysts. Countries such as Australia and Brazil that have substantial iron reserves and relatively low populations are major iron ore exporters. On the other hand, China which has substantial reserves but is a large steel user as well has banned iron ore exports and in fact actively encourages its steel producers to secure and develop iron ore deposits outside. Indian iron ore reserves are estimated at 18 billion tonnes, and if India were to move up from its present per capita consumption level of 30 kg. to 300 to 400 kg. as in the developed countries, the reserves would last just 30 to 50 years.

The third disturbing aspect is that the MoU provides significantly larger concessions to POSCO than to the Indian steel producers with whom the Government of Orissa has signed similar MoUs. For instance, in the case of the MoU with the Tata Iron and Steel Company signed seven months before the POSCO deal, the company is to be provided with iron ore requirements for 25 years for its 6 million tonnes plant. On the other hand, for POSCO, the Government of Orissa has guaranteed 30 years' requirements. Similarly, the Tata Steel MoU is valid for a period of three years and the POSCO MoU for five years, and POSCO is allowed a more liberal time frame for its project. Again, the Government of Orissa is more emphatic and forthcoming in promising administrative support and land and all help to get environmental and forest clearances in the case of POSCO than in the case of the other steel producers.

In envisaging the commitment of 600 million tonnes of iron ore for POSCO's steel plant at Paradeep and another 400 million tonnes for export, the question arises if Orissa has not overextended itself. Before POSCO, it had signed MoUs with 36 Indian steel producers involving a total steel production of 34 million tonnes. Of Orissa's 4.8 billion tonnes of iron ore reserves, 2.8 billion tonnes have been allotted to existing producers including the Steel Authority of India and the Orissa Mining Corporation.

The MoUs signed with Indian producers will need an allotment of 1.8 billion tonnes, and at the time of the POSCO deal just 0.2 billion tonnes remained uncommitted. It remains unclear if the 1 billion tonnes for POSCO is to come from the commitments to any of the other players.

Tata Steel vs POSCO - A tale of two MoUs

Hindu Businessline

August 19 2005

THE Orissa Government has offered the South Korean steel major POSCO superior terms to persuade the latter to set up a steel plant in the State than the ones on which it got the Tatas to do the same, documents available with Business Line indicates.

The State Government has offered POSCO a disproportionate quantum of iron ore and land relative to what it has recognised as the requirement of the Tatas for its project. It has also permitted the company flexibility in the choice as between domestic and imported ore. It is even willing to allot iron ore and coal blocks out of what is currently available with its own undertaking. But most important of all, it has promised to 'interface' with the Centre to secure additional quantities of iron ore for use by its plants in South Korea.

On the relevant clause on iron ore entitlement, the MoU concedes that the company would require 600 million tonnes (mt) of iron ore for its 12 mt of annual steel making capacity. In contrast, the Tata project envisages a requirement of only 250 mt for its six million capacity plant. On a pro-rata basis that works out to only 500 mt. Either the POSCO project would be entitled to a higher usage of iron ore per tonne of steel making capacity or the commitment to make iron ore available runs into a longer period of time or both.

If for the Tata project, the State Government would merely 'consider' their request for making available adequate iron ore reserves, the POSCO project would have the comfort of the 'assistance' of the State Government in making firm arrangements with the Orissa Mining Corporation if required by the company!

On the request to source additional iron ore for use in its plants in South Korea, the MoU says that the Orissa Government "will assist POSCO in establishing suitable contacts and interfaces with the Government of India for this purpose."

There is some doubt as to whether there is enough iron ore available within Orissa if one takes into account, the iron ore requirements of projects already sanctioned prior to the POSCO deal and what is being promised to the company.

Sources in the industry say that capacities to the tune of 34 mt per annum are expected to come up along side that of the POSCO plant. Of this, the major players such as Tatas, Jindals, Essar and so on alone would need 1.1 billion tonnes (bt) of iron ore during the life of the project. If one throws in the requirement of smaller sponge iron manufacturers, the total requirement comes to 1.5 bt, according to industry experts. The available uncommitted iron ore reserves are only 2 bt. The POSCO deal could upset the demand-supply balance.

That export of iron ore for use in its domestic plants is an integral part of the larger plan that POSCO has for the Orissa steel project is clear from the project cost itself. The Korean project for a 12-mt capacity plant envisages an investment of the order of Rs 51,000 crore. The Tata's steel project for six mt requires no more than Rs 15,400 crore. Even after allowances for differences in capacity and product mix, steel industry sources claim that the investment envisaged is substantially higher than what is dictated by the scope of the steel segment of the project. The MoU talks of a steel project and 'mining' and 'transportation' projects: a clear indication of the stand-alone character of the mining project and the infrastructure needed to sustain it.

It has agreed to recommend to the Centre the company's case for the grant of the status of 'Special Economic Zone' for tax purposes. The MoU with the Tatas is silent on this aspect.

The deal involving the Tatas and that of POSCO are separated by only seven months with the Tatas signing their understanding with the Orissa Government in November 2004, while the South Koreans followed suit in June 2005; hardly an interval of time for any one to think that the investment climate of Orissa has undergone a dramatic change as to force the State Government to come up with better terms.

INDIGENOUS PEOPLES DAY: Riches Out from Under India's Orissa Tribals

Ranjit Devraj, IPS

Tuesday, August 09, 2005

NEW DELHI - While corporate India eagerly counts foreign direct investment in mining projects, tribal peoples sitting on some of the world's richest deposits of iron ore, bauxite and copper in eastern Orissa state are watching, with trepidation, the sudden burst of alien activity on their ancient lands.

''They have every reason to be fearful because their experience with mining companies has not been a happy one so far, and we are now seeing investments on an unprecedented scale by transnational corporations,'' said Walter Fernandes, India's foremost expert on India's neglected tribals and their troubles.

Fernandes, who is currently the director of the Northeastern Social Research Centre at Guwahati in eastern Assam state, said in an IPS interview that although indigenous populations or tribals comprise just over eight percent of India's population of a billion people, 40 percent of all ''project displaced persons'' are estimated to be tribals.

According to the 2001 census, there are now more than 90 million tribal people in India, with large concentrations in eastern and central Indian states, such as Orissa.

''So far they have suffered because of large dams that have come on their traditional lands, but lately, as a result of economic liberalisation, the mineral-rich lands they have lived peacefully on for centuries are being eyed by transnationals as well as Indian mining companies,'' Fernandes said.

Lately, the transnational corporations have stopped eyeing and started buying -- especially in Orissa, which is ruled by the right-wing, business-friendly, Janata Dal (P) party of Chief Minister Naveen Patnaik.

On Jun. 22, South Korean steel giant Pohang Steel Company (POSCO) signed a memorandum of understanding with the provincial government in Orissa to build a massive 12 million tonne steel plant at an unprecedented investment of 13 billion US dollars.

Said POSCO's chairman Ku Taek Lee at the signing ceremony in Orissa's capital, Bhubaneshwar: "Through this project, we hope to contribute significantly to India's rapid economic development and further accelerate the progress being made by India toward achieving the status of economic superpower.''

No one can quarrel with such statements especially when backed by outsized investment in Orissa, India's most backward state, where hunger deaths and bonded labour are common and the human development index abysmal.

But political parties of every hue from the communist parties of the Left Front that support the ruling, United Progressive Alliance government of Prime Minister Manmohan Singh, to the right-wing Bharatiya Janata Party (BJP), which supports Patnaik's government and leads the national opposition, has problems with iron ore export concessions awarded to POSCO as part of the deal.

Marxist leader and parliamentarian Sitaram Yechuri said: ''We know that the Brazilian government insisted that POSCO purchase iron ore at international market prices and did not approve handing over captive mines to POSCO. It has also rejected other terms and hence the company preferred Orissa.''

POSCO is, however, only the latest conglomerate to enter Orissa.

Over the past year or so, Patnaik's government has processed something like 35 major proposals to build steel plants or set up mines in the state worth over 25 billion dollars, and includes players such as the Australian BHP-Billiton, the world's largest mining company, and India's Vedanta Group, owned by ''metal maharaja'' Anil Agarwal.

The Japanese conglomerate Mitsui, which already owns mining concessions in Orissa through an Indian subsidiary, has plans for further investments worth three billion dollars in the state.

But Fernandes is convinced that mining for iron ore and making steel are just a smokescreen, and what the transnationals are really after are Orissa's vast copper deposits.

''They are only cracking open the market now and testing legal implications of constitutionally-guaranteed protection for tribal lands, which cannot be easily alienated to non-state players -- there is after all new legislation for tribals on the anvil and the draft is now under discussion,'' he said. .

Fernandes said existing legal protections cannot stand up in court because Indian laws recognise individual ownership but not community ownership. Most of the mining land in Orissa is, in fact, the common land of tribals, and therefore, has little protective value.

An immediate worry for activists like Fernandes is that at a time when millions of tribals were awaiting rehabilitation after being displaced by earlier development projects, vast numbers of new displaced persons were being created in Orissa.

According to a paper on tribals drawn up this year the National Advisory Council (NAC), a group of academics and voluntary workers that reports to government, the number of tribals displaced by development projects over the last 50 years exceeds nine million, with only 60 percent of that figure having benefited from any sort of rehabilitation.

''It is a known fact that displacement has led to far-reaching negative social and economic consequences, not to mention the simmering disturbance and extremism in most of the tribal pockets. Economic planning cannot ignore these consequences in the light of displacement, '' the NAC paper said.

''The tribals lose their land not only to the project authorities but even to non-tribal outsiders who converge into these areas and corner both land and the new economic opportunities. Inadequate rehabilitation will further compound their woes as they will become assetless, unemployed and be trapped in debt bondage and may even become destitute,'' the NAC paper warned.

Such warnings from so influential a body as the NAC have not been entirely lost on the investors and transnational corporations that are keen to lay their hands on Orissa's wealth.

Fearing the powerful political forces that have been set in motion by the ''mineral rush'' to Orissa, the U.S.-based non-profit group International Watch announced on Aug. 2 a five-million-dollar Tribal Rehabilitation Fund to ensure ''proper and human rehabilitation and resettlement of tribals who would be displaced as a result of the POSCO project.''

International Watch clarified that the five million dollars would be the first instalment for the fund and that more money would be added as rehabilitation and resettlement efforts -- for the 4,000 tribal families estimated to be affected -- move forward.

International Watch, which plans to open up an office in Bhubaneshwar by Aug. 25, warned that the political opposition now building up might ''derail the project'' that promises to ''lift thousands of poor citizens off a life of abject poverty''.

Curiously, International Watch describes itself as ''a watchdog to detect and monitor groups that finance, aid, and abet terrorists around the world,'' and also one that ''works with international conglomerates committed to improving quality of human life and eliminating poverty.''

''That is exactly the language we have heard so often before,'' said Fernandes, ''but the fact is that millions of tribals are destitute after having been driven away from their lands and cannot even ask for menial jobs at the projects because of increasing levels of mechanisation and capital-intensive technology.''

''Many of those who put up resistance have been locked away on charges that have to do with law and order and in many instances they have been held under anti-terrorism provisions,'' he said.

The United Nations celebrates International Day of the World's Indigenous People on Aug. 9, calling the world community's attention to issues specific to indigenous communities, including disputes over sovereignty and rights in regards to ancestral lands.

From the horse's mouth

The following is taken from International Watch's own website

U.S./India Based International Watch Sets up $5 Million (About Rs. 22 Crore) Tribal Rehabilitation Fund to Assist the Posco Project in Orissa

New Delhi, Delhi, India, Tuesday, August 02, 2005 -- (Business Wire India) -- International Watch organization, based in the United States and India, has set up a $5 million (about Rs. 22 Crore) Tribal Rehabilitation Fund to ensure proper and humane rehabilitation, and resettlement, of tribals who would be displaced as a result of the Posco (S. Korea) project in the State of Orissa, India. The $5 million is the first instalment for the fund, and more money will be added as the rehabilitation and resettlement of the tribals move forward. Based on the projections of the Orissa Government, around 4,000 tribal families would be displaced as a result of the Posco project. Part of the fund will be used to provide micro-economic seed money to tribal entrepreneurs for setting up small businesses in connection with the Posco plant. International Watch is scheduled to open up an office in Bhubaneswar by August 25, 2005.

Government of Orissa is facing strong opposition from certain quarters of the Congress Party, Bharatiya Janata Party, Communist Party of India (Marxist), Communist Party of India (CPI), and Swadeshi Jagaran Manch (SJM), among others. Certain major domestic steel conglomerates are also opposing the project.

Such opposition might derail the project-the largest FDI the history of India ($12 billion). The state of Orissa is one of India's most impoverished states, with approximately half the population living below the poverty line. Posco of South Korea is the first international conglomerate to come to India with a serious proposal and serious money. Posco's investment - the plant, the port, and the mines - will lift thousands of poor citizens off a life of abject poverty.

International Watch has been in close contact with the Prime Minister of India Dr. Manmohan Singh, Congress Party President Shrimati Sonia Gandhi, Orissa's Chief Minister Shri Naveen Patnaik, and various ministers and leaders, encouraging expeditious infrastructure development in the state, and praising their efforts in welcoming Posco.

International Watch has made strong pleas to CPI (M) leaders Shri Prakash Karat and Shri Sitaram Yechuri in favor of the Posco project. The organization has also been in constant contact with CPI National General Secretary Shri A. B. Bardhan, BJP President Shri L. K. Advani, and the SJM leadership, among others. International Watch has requested each political party to nominate a representative to the Board of the Tribal Rehabilitation Fund. The organization wishes to express its deep gratitude to all the leaders who are considering full cooperation and support for its efforts.

One major goal of International Watch is to facilitate the signing of the Memorandum of Agreement (MOA) between POSCO and State of Orissa, after the feasibility studies by the company are completed. If the Posco project fails to take off for some reason, it will be a great loss to the state of Orissa as well as India. Furthermore, if the project fails, other multinationals eyeing India for investment will back off, and that will be the greatest loss of all.

Quoting Posco Chairman and CEO Mr. Ku Taek Lee: "Through the Posco project, we hope to contribute significantly to India's rapid economic development and further accelerate the progress being made by India toward achieving the status of economic superpower. I am also confidant Posco's Indian investment will shed positive light on India for other global investors, attracting more mega projects to the nation. The success of our project in Orissa will demonstrate to the world that there is a multi billion opportunity to build Indian infrastructure."

About International Watch

With deep roots in the United States and India, International Watch is a non profit organization that operates on many fronts. The organization has offices in the US, India, and satellite offices in other parts of the world. It is linked to other non profit organizations, like the India Terrorism Victims Relief Foundation, which is involved in providing all sorts of assistance to families in India. International Watch also operates as a watch dog to detect and monitor groups that finance, aid, and abet terrorists around the world. The organization works with international conglomerates committed to improving quality of human life and eliminating poverty. International Watch also assists multinationals in establishing roots in India so that the nation can achieve its full potential in all economic fronts.


Mr. P.N. Kutty
International Watch
1259 West Cliff Court/2B
Dayton, Ohio 45409, USA
(937) 290-3780/937-29-0500

TATA takes a stand

The Managing Director of India's biggest iron and steel company has (not surprisingly) come out against the POSCO deal - though not in so many words. Clearly his "pro-nationalist" arguments are partly self-serving, while his claim that "no country in the world allows foreigners to own iron ore mines" or "FDI in the steel sector" is wide of the mark. Mittal Steel (with its own eyes on India) has ventures in Kazakstan and Bosnia; Rio Tinto owns the Iron Ore company of Canada, and China's Shougang Hierro is mining iron in Peru.

Exporting iron ore is against national interests: Tata Steel MD

The Hindu Business Line

17th August 2005

ALLOWING exports of iron ore is "absolutely against national interests", Mr B. Muthuraman, Managing Director, Tata Steel, said today.

Speaking to journalists of The Hindu group here, Mr Muthuraman said it was "a dangerous trend" to allow exports of iron ore (even) in exchange for investment in steel capacity in India.

Explaining his stand, Mr Muthuraman observed that the countries that allowed exports of iron ore were only those that did not have potential for domestic consumption of steel. He gave two examples. Ukraine, which has the world's largest iron ore deposits of 70 billion tonnes, needs about 7 million tonnes of iron ore annually for its domestic steel industry ; enough to last for a thousand years. Australia's iron ore deposits of 62 billion tonnes were enough to last for the next 500 years.

In contrast, India has about 18 billion tonnes of iron ore resources. The country's consumption is rising and is expected to match China's 300 million tonnes, from 30 million tonnes now. When that happens, the country's reserves will be exhausted in 55 years, he said.

Mr Muthuraman also noted that no country in the world allowed foreign companies to own iron ore mines. Indeed, no country allowed FDI in the steel sector. He said that international steel and mining companies were rushing into India only because they could not acquire mines anywhere else in the world. These companies were making it a pre-condition that they be allowed to export iron ore to their plants abroad. "This is a dangerous trend," he said.

Asked why Indian steel majors were voicing these concerns only now, although India has been exporting iron ore for long, Mr Muthuraman said that until recently the country used to export about 10 million tonnes of ore annually.

But now exports have risen to about 55 million tonnes and were set to reach 100 million tonnes. Besides, all these years exports were mostly of fines, which otherwise go waste (unless they are pelletised in sintering plants).

He stressed that Tata Steel had always been cautioning the Government against iron ore exports but the response had invariably been that the exports were of small quantities, so there was no cause for concern.

Asked why the Tatas were exporting chrome ore from their Sukinda mines in Orissa, Mr Muthuraman said that there were two reasons.

First, because of high power costs in India the cost of converting chrome ore into value-added products (stainless steel) was much more than the freight cost of shipping the ore to some other country and producing there. It therefore made sense to do the value addition where it was cheaper.

Second, the consumption of stainless steel in India was low and, therefore, the chrome ore deposits; although far smaller than iron ore would last much longer.

He drew a parallel with the aluminium sector, where, according to him, it did not make sense to produce the metal from alumina because of the power-intensity of the process. His reasoning was that export was a logical thing in the case of those minerals whose conversion costs were far higher here than, say, in South Africa, and the domestic consumption of finished products was not of significant quantities. However, till such time that the distinction could be made, Tata Steel was telling the Government to stop exports of minerals such as chrome ore.

"There is a difference between the various minerals, which unfortunately today the country is not yet mature enough to fully understand," he said. The ultimate objective was to have different policies for different minerals.

Mr Muthuraman said that the history of the global steel industry could be divided into three phases. In the period between 1900 and 1945, a period marked by two world wars and the Great Depression, steel demand grew 3.4 per cent, but rose to 6.7 per cent in 1945-1975, thanks to post-war reconstruction efforts of the US and Europe.

However, demand growth fell to 1.1 per cent in the next quarter century as the infrastructure building got over in those regions and consumption stabilised.

Since the beginning of this century, demand growth has accelerated, driven by consumption in China and India. "The future of steel will be more like the 1945-1975 period than the 1975-2000 period," he said.

But with two major differences. One, the demand would be driven by countries far more populous than the US and Europe and two, the demand growth would be on a larger base of 1 billion tonnes. Thus the growth in the next 25 years would be more sustainable than in the 1945-1975 period, he said. This year, up to July, the industry grew by 7 per cent.

Globally, a number of changes had taken place. The steel industry, which was state-owned, was now increasingly getting privatised. This would result in efficiencies improving and costs coming down. The privatisation would be accompanied by more consolidation in the global steel industry. While suppliers to the steel industry as well its consumers were consolidated, the steel industry was fragmented, a situation that would now change.

The consolidation would also result in prices being stable. Long-term steel prices would be higher than the last 25 years, he said and added that those that will benefit are the companies that have captive raw material resources.

Mr Muthuraman said that the Indian secondary steel sector faced the danger of becoming unviable because of the high cost of power and dependence on imported scrap.

He said that units should set up sintering plants for converting fines into pellets and set up mini blast furnaces.

Tata, and two other Indian steel companies are upping the ante in the tribal state of Jharkhand, though Mittal Steel has met a roadblock to its own plans.

Big 4 fight for Chiria mine share

Varun Sood / New Delhi Business Standard

August 19, 2005

Tata Steel, Mittal Steel, SAIL, Essar eye captive mining leases.

Located deep in the obscurity of Jharkhand, the Chiria mining belt in the West Singhbhum district is helping the five-year-old state take a flight straight into the billion-dollar world of steel magnates.

It's about 180 km from Jamshedpur, which offers the nearest resemblance to civilisation. And yet, LN Mittal, the world's biggest steel producer with a house on London's costliest street, already knows Chiria like the back of his hand.

As do Tata Steel Managing Director B Muthuraman, the Ruias of the Essar Group, and the brass of public sector Steel Authority of India Ltd.

For, Chiria has what is increasingly being regarded as one of the most precious resources in the world, iron ore of the highest grade — the iron content ranging from 62 to 65 per cent.

All the four companies have applied for captive mining leases on the mines of Chiria, whose treasure is estimated at 1.5 to 2 billion tonnes. That makes it the world's second largest deposit of high-grade iron ore after those in the Urals.

Chiria is endowed with a large number of mines, of which only eight are leased at present, all of them to Indian Iron & Steel Company, which is the only company working the mines there. IISCO used to have 10, but two of them were denotified early this year.

With every steel manufacturer worth its furnace having announced expansion plans, an assured supply of iron ore is increasingly emerging as the lifeline of their operations. More so for those like Essar that do not have captive mines.

"The cost of accessing iron ore from captive mines is $5-6 a tonne. The cost surges to $40-50 a tonne if purchased in the open market," says an executive with a steel company.

What's more, ore prices are projected to rise. Little surprise then that Mittal, who is wooing the Jharkhand government with his mega plant plans, wants to export 30 per cent of its ore allocation to feed Mittal Steel's operations outside India.

The World Steel Dynamics, at its annual ranking in June, had given high ranks to Tata Steel and Severstal of Russia partly on the ground that the duo had easy access to iron ore and coking coal mines.

Following the lead set by Vedanta in late 2003, its rival (and superior) in the alumininum stakes is now also planning to list some of its shares outside India to attract investment from the Gulf region. One of the reaons given is a slowdown in demand from China - on which a significant part of India's bauxite/alumininum expansion has been predicated over the past three years

Mittal Steel's Jharkhand foray may be delayed - MoU with Govt delayed over permission for iron ore export

Varun Sood / Business Standard, New Delhi

August 17, 2005

The much anticipated Mittal Steel's memorandum of understanding (MoU) to be signed with the Jharkhand government may have hit a roadblock on the issue of exporting iron ore.

Mittal Steel wants permission to export 30 per cent of iron ore from the mines allotted to the company in the state. But, the state government does not seem to be very receptive to the idea.

'The MoU will not get signed until the issue of 30 per cent exports of iron ore is amicably resolved,' said an official in the Jharkhand government.

A Mittal Steel spokesperson said that the company had never really decided on a date on when the MoU would have been signed. In an email response, a Mittal Steel spokesperson said: 'We have no update on the potential Jharkhand investment. We are still holding discussions and as and when the MoU is officially signed we will make an announcement accordingly.'

However, officials in the Jharkhand government maintain that the MoU was to be signed sometime this month. Sources in the state mining department said the state government seemed to be chalking up an alternative plan, acceptable to both Mittal Steel and the Opposition.

One proposal is that the state government should try to persuade Mittal Steel to lower its demand for exports from 30 per cent to 5-10 per cent. Another proposal might be on the lines of the 'swap deal' followed by Posco, whereby Mittal Steel might be allowed to export low grade iron ore from the state in exchange for importing a similar quantity of high grade iron ore.

Sources also add that the issue of exporting 30 per cent iron ore becomes a thorny issue in wake of the Panchayat elections scheduled in the state later this year.

'Obviously, the government would not like to go ahead with the proposal to allow export iron ore and face the elections at the same time', said the official.


* Mittal Steel wants permission to export 30 per cent of iron ore from the mines allotted to the company in the state

* The MoU has to be signed by this month-end discussions are still on, said a Mittal steel spokesperson

* The state Government is chalking out an alternative plan accptable to Mittal Steel and the Opposition.

* The state Government hopes to persuade Mittal Steel to lower its demand to 5-10 per cent

* Another proposal might be on the lines of the swap deal whereby Mittal Steel may be allowed to export low grade ore against import of high grade ore.

Finally, some Indian citizens remind their government of its obligation to close down the country's most criticised existing iron ore mine.

Writers' call to end mining

The Hindu

August 16 2005

'The loss to humanity if the park is to vanish can never be assessed'

Writers U.R. Ananthamurthy and Poornachandra Tejaswi, wildlife biologist and researcher Ullas Karanth and two others have written to all legislators in the State urging them to help stop mining by Kudremukh Iron Ore Company Ltd. (KIOCL) in the Kudremukh National Park according to the Supreme Court order.

They have said that the 2001 order of the Supreme Court has taken note of the biodiversity of the park and the disastrous consequences of mining low grade iron ore in an area that experiences 7,000 mm of rainfall annually.

They said the loss to humanity if the park is to vanish can never be assessed. Apart from the wealth of flora and fauna that have made the Western Ghats, of which the park is a part, one of the 18 global ecological hotpots, it is a travesty that mining is being carried on in a place that happens to be the birthplace of the Bhadra, Tunga, Netravathi and the Hemavathi. The scientific analysis accepted by the State Government noted in 2002 that mining in the park generated 2.2 lakh tonnes of silt, which has been allowed to flow and settle in the Bhadra and the reservoir.

Accumulation of silt in the left bank of the Bhadra reservoir has affected many farmers and villagers depending on water for irrigation and drinking.

The Supreme Court has taken all these factors into consideration, and on a petition by K.M. Chinnappa of Wildlife First Trust ordered in October 2002 that mining should be stopped by this December 31. Despite knowing this, the Government has been entertaining requests to intervene and appeal to the Supreme Court for reviewing its orders, they said.

Tatas finalise Bastar village for 5 mt steel plant

Varun Sood, India Press

September 27, 2005

Tata Steel appears to have zeroed in on Salepal village in the Bastar district of Chhattisgarh for setting up its 5 million-tonnes per annum steel plant, which according to managing director B Muthuraman, is going to cost Rs12,000 crore.

According to a senior state government official, the application of the company seeking 3,500 acre for the plant and another 2,000 acre for a township is "under review".

For grant of captive iron ore mines, the company has asked for iron ore 'deposit number 1' of the Bailadila range in the Dantewada region of the state.

The iron ore found in the region has iron content averaging 60-68 per cent. The water from Shabri river is going to be the lifeblood for the proposed steel plant and the township.

A Tata Steel spokesperson declined to comment on the development, saying that a "formal proposal by the company is yet to be submitted".

Earlier in June this year, the company had signed a Memorandum of Understanding (MoU) for setting up a 5 million tonne per annum greenfield integrated steel plant in the Bastar region of Chhattisgarh.

According to the MoU, the integrated steel plant's first phase will see the installation of 2 million tonne capacity, which is likely to be completed in 48 to 60 months from the date of obtaining all statutory clearances. The second phase will see the addition of the remaining 3 million tonne capacity.

The Dantewada region lies at the southern tip of the state.

There are an estimated 14 identified iron ore deposits in Bailadila range with an approximate quantity of 300 million tonne.

National Mineral Development Corporation (NMDC) is operating three large mechanised iron ore mines in the region - deposit number 14 (commissioned in the year 1968), deposit number 5 (commissioned in the year 1977) and number 11-c (commissioned in the year 1987).

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