Mining reform plan meets resistance in states

Mines ministry plans to limit premiums to 50% of ore value, replacing system where bids can cross even 100%

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Steelmakers say proposed system will favour large firms.

(BLOOMBERG)

will reduce state government revenues, since they are currently benefitting from exceptionally high bids, and switching to upfront payment may favour large steelmakers with deep pockets, as not everyone can afford heavy payments at the start, said Nishtha Mukerjee Sinha, general manager for iron ore, ferro alloys, coal at BigMint, a commodities market intelligence firm.

Executives and ministry officials said that internal objections from steel and mines ministries, resistance from iron ore-bearing states, and concerns raised by several stakeholders about the limited benefits of the proposals have together stalled the reform process. As a result, any policy changes now appear unlikely in the near term.

"The delay effectively pushes back any immediate improvement in ore availability or relief in steel input costs," a steel industry executive said, requesting anonymity.

The panel, mandated to meet every 15 days, has not convened for over two months. Its last meeting took place in the second week of September.