There is generally little to recommend on government publications except for those that have some useful data. Not that there will not be exceptions. A new brochure from the steel ministry will find favour for offering an unambiguous roadmap for the industry’s future, along with neatly arranged data.
No doubt, after some years of verbal bravery, but little action on ground, Virbhadra Singh has brought in a whiff of fresh air in the corridors of the steel ministry. First, the 100-day programme, whose implementation can change the structure of the steel industry; and now the publication, both are proof of the ministry’s resolution to give shape to some long-postponed reforms.
According to the minister, restructuring through mergers and strategic tie-ups is being done with two principal objectives – help public sector units achieve economies of scale and gain raw material security through vertical integration. Singh says that a “key challenge” for the ministry is to ensure that increasing steel demand in future should be met “entirely” by domestic production.
Every steel-producing country, including India, is sensitive about imports. Our steel producers are telling the government to introduce safeguard duty on HR coils imports from China and east European countries. But the surge in imports has got much to do with demand generation from the automobile and white goods industries.
The import sensitivity has risen, as domestic steel prices, in tandem with world rates, continue to remain uncomfortably soft despite our steel demand growing nine per cent on annual basis. Fall in prices from last year’s historic highs has been unnervingly steep for steel makers. It is not unexpected that countries, burdened with surplus capacity, will be targeting a market like India, where steel use is recording the second-fastest growth rate.
Singh, in his hallmark suavity, has assured local steel makers that he would take appropriate steps if “large-scale imports are noticed”. Is he not, thereby, trying to convey that nothing alarming is happening at this point? At the same time, when SAIL chairman Sushil Roongta nurses doubts about world steel prices moving forward any time soon, our vulnerability to dumping remains.
Disturbing micro issues will keep cropping up from time to time. But these, fortunately, are not distracting the minister’s attention from the two primary goals of lifting our steel capacity to 124 million tonnes in another three years and ensuring raw material security for the burgeoning steel industry.
No one will deny that there is much confusion over iron ore deposit allocation to steel mills, particularly the proposed new ones to be built. The worst story in this domain is the eyeing of slices of Chiria iron ore deposits in Jharkhand by private steel makers. These deposits, however, rightly belong to SAIL following its merger with Indian Iron and Steel Company (IISCO). Roongta must have knocked at many doors and made a convincing case of SAIL ownership of Chiria deposits, before he could finally get the state government’s nod, though not yet fully.
This apart, the mineral-owning states, in their exuberance, have made commitments of the mineral to groups proposing to build steel mills, well in excess of what are known to be under the ground. Incidentally, as many as 222 MOUs, signalling steel capacity creation of 276 million tonnes, are there. What is of concern to Singh is that the more ambitious projects, including at least three involving large FDIs, are stuck because of non-availability of land and mines.
An impatient Singh, therefore, wants the prime minister to consider if the tagging of iron ore, at least from the list of minerals required for making the metal, to the steel ministry would not be the ideal thing to do. That the steel ministry is the right arbiter to decide, in consultation with the concerned states, as to which parties should be given what deposits stands on sound logic. The overriding consideration is to expedite application processing from steel groups seeking mines linkages and also facilitate receiving a host of environment-related sanctions.
Till such time, a decision on Singh’s suggestion to add iron ore mining to the steel ministry is taken, the inter-ministerial group headed by steel secretary will have to play a more effective role in sorting out problems relating to mines allotment, infrastructure and logistics.
Like many geologists, the new Steel Secretary Atul Chaturvedi must be thinking that India has a lot more than 25 billion tonnes of iron ore deposits. That is why he wants to give a big push to prospecting of the mineral by involving dedicated venture capital funds. Chaturvedi will hold bait for VC funds by promising conversion of prospecting licences into mining licences.
Source : Business Standard