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Rabindra Nath Sinha

KOLKATA, Feb. 2

THE demand for more external marketing freedom raised in recent times by the domestic non-captive iron ore segment has to be viewed against the backdrop of the changes occurring in international trade as also the WTO regime.

The domestic non-captive iron ore segment clearly wants to be freed from the restrictive provisions of the iron ore export policy that the Union Government has been pursuing for a long time mainly in the interest of the domestic steel industry.

A point being appropriately made in support of the demand for more external marketing freedom by the non-captive iron ore segment is that the projections for domestic iron ore demand have hardly ever matched actual requirement in the successive five-year plans.

The final recommendations of a seminar on the prospects for Indian iron ore held some time ago under the aegis of the Federation of Indian Mineral Industries emphasise the need for more freedom in the sphere of marketing, particularly exports.

"In the case of iron ore, exports serve as cushion against fluctuations in domestic demand or vice-versa. This requires freedom of operations by buyers and sellers and non-interference by Government in market mechanism,'' observes FIMI in its recommendations.

In the context of the domestic market, it has been pointed out by FIMI that almost all integrated steel plants have captive mines and they occasionally purchase small quantities from non-captive sources to sweeten/blend with their iron ore.

It has suggested that as far as possible, integrated steel plants should seek long-term contracts with non-captive mines so that the latter are able to plan their production schedule accordingly.

If a mining lease is given only for captive purposes, this condition must be strictly adhered to and no iron ore produced from such mines should be allowed to be sold locally or overseas.

Development of suitable sintering, pelletisation and briquetting facilities at the plant sites should be given priority to ensure utilisation of iron ore fines.

As there is no regular or consistent domestic demand for iron ore from non-captive sources and as foreign parties prefer to buy from mine owners to ensure timely delivery, export of iron ore should be made free, without any qualitative and quantitative restrictions from all regions and ports in the country. This will be in consonance with the WTO regime.

By this recommendation, FIMI, in fact, is demanding withdrawal of the existing canalisation arrangement. As is known, MMTC Ltd is the canalising agency for export of ore with iron content of 64 per cent plus.

Further, FIMI has suggested that till qualitative restrictions are removed, the provision for export of ore under OGL with iron content up to 64 per cent should be changed to include all ore with iron content up to 65 per cent as such ore is classified as medium grade.

As it is important to maintain business confidentiality, mine owners should not be insisted upon to mention the name of the foreign buyer and destination-country in the licences.

Finally, economics of market forces should determine whether iron ore is to be exported in raw or processed or finished product form.

Meanwhile, it is seen from the paper of Mr Sanjiv Batra, Director (Marketing) of MMTC, iron ore exports from India in the last five years were in the range of 29-38 million tonnes, accounting for 43-49 per cent of the domestic production.

The major markets serviced by India in the last financial year were (in per cent) : Japan (44.96), China (37.26), South Korea (6.21), West Europe (3.97), Pakistan (1.85), Iran (2.67), Taiwan (2.4) and others (0.68).

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