India should learn from China to be able to save its reserves, according to Union Minister of Steel Virbhadra Singh. “They (China) are importing our iron ore fines and using it to produce steel products.” According to the minister if we have to export, it should be steel and not its raw material. In an interview, the Minister spoke about the proposed mining policy, steel production target, status of the SAIL-Posco JV and rising steel prices among other issues. Excerpts:
Your ministry set a target to produce 124 million tonne of steel per annum by 2012. How much of it would be achieved, since some greenfield projects may face delays?
The target has to be achieved by December 2012 and our target is between 120-124 million tones. If some of the ongoing greenfield projects get completed on time, then we would be able to achieve the upper end of the target of 124 million tonnes. However, if there is a delay in completion of greenfield projects, we would achieve production capacity of 120 million tonnes. But it would not go below this.
Many steel companies have signed memorandum of understandings (MoUs) in Karnataka this month. Can the government speed up the process of mine allocation to them?
Allotment of mines is a State subject. The Centre can only facilitate the mine allocation process. So the companies that have signed MoUs with the Karnataka government will have to interact with the state governments to get the allotment of mines.
What key points in the new mining policycould adversely affect the steel industry?
The new mining policy has to be formulated and there is going to be a new mining Act, but currently we are discussing different issues in the mining policy. At this stage it would not be appropriate for us to discuss the details of the proposed Act.
You are supporting higher export tax of iron ore. But the domestic steel companies do not use 90% of the iron ore fines that is exported to China. Why do you want to save something that we are not using in the country?
Whether it is iron ore fines or iron ore lumps, or for that matter any natural resource of the country, it should be preserved for future use of the country. It is always better to export a value-added product to other countries... that will get us better realisation. Look at China, they are importing our iron ore fines and using it to produce steel products.
And they are saving their own reserves. We must learn from them. Indian steel industry is growing at a very fast pace. Within a few years we would be using the iron ore fines within our country and whatever reserve we have, needs to be preserved, keeping in mind the future needs of our steel industry. If we have to export anything, we should export steel, not its raw material.
Most of the iron ore mining in India happens in the unorganised sector. Post this duty, they will be out of competition. How do you plan to save the unorganised iron ore mining sector?
In the largest interest of the country, we will have to preserve our resources. I know there are some unorganised companies, but at what rate are they selling raw material? Tomorrow when our steel companies will need iron ore mines, where will we go then?
What is the update on SAIL-Posco joint venture?
We are at the negotiating stage with the Korean Steel maker to form a joint venture (JV) with steel major Steel Authority of India Ltd (SAIL). They have one of the best technologies to produce steel and we want it in our country. The company has also shown interest in setting up a JV in India. But it will take some time to strike a deal.
The steel ministry is actively asking SAIL and others to look for raw material integration outside India, but nothing has happened in the past few years. Why are we so slow?
A joint venture company was established some time ago called International Coal Ventures Ltd (ICVL) that was set up by NTPC along with SAIL, Rashtriya Ispat Nigam Ltd, Coal India Ltd and NMDC.
But it has not yet started working because Coal India did not show much enthusiasm after the formation of the company. And now they have started another company for this purpose. Well, I do not mind them forming a new company, as this is their decision. If one of the JV partners does not want to continue with us, it doesn’t matter. We have asked the others about their intention to stay in the company and do some serious work, because we need to produce results. If someone wants to exit the JV, we have no problems, but whoever stays will have to be serious.
There are vast opportunities in Africa, Indonesia and Australia to acquire iron ore and coking coal assets, but for that our company will have to work seriously.
The iron ore mine allocation has been rather slow in India and that has pushed back steel plants. Are you trying to expedite the system? If yes, how?
I hope this problem would be taken care of in the new mining policy. In the current system the allocation of mines is quite cumbersome and time consuming. First, it is the Centre that sanctions a mining project, after that it goes to the State government and then again comes back to the Centre. Let us see what shape the new mining policy takes. But I am sure we would certainly make the process of mine allotment a lot easier for companies.
Do you think steel prices will go up in the near future? If that happens, will you intervene to control prices?
You know it is a commodity and prices are linked to international markets. Since it is a de-regulated commodity, we cannot directly control prices.
Sometimes the prices go up and at other times they come down. Since January this year, the prices have increased, but it has not been a very significant rise in prices. But yes, if in the near future the prices go up significantly, then we can use our moral power to request companies to control prices as much as possible, for the interest of the country.
Your ministry set a target to produce 124 million tonne of steel per annum by 2012. How much of it would be achieved, since some greenfield projects may face delays?The target has to be achieved by December 2012 and our target is between 120-124 million tones. If some of the ongoing greenfield projects get completed on time, then we would be able to achieve the upper end of the target of 124 million tonnes. However, if there is a delay in completion of greenfield projects, we would achieve production capacity of 120 million tonnes. But it would not go below this.
Many steel companies have signed memorandum of understandings (MoUs) in Karnataka this month. Can the government speed up the process of mine allocation to them?
Allotment of mines is a State subject. The Centre can only facilitate the mine allocation process. So the companies that have signed MoUs with the Karnataka government will have to interact with the state governments to get the allotment of mines.
What key points in the new mining policycould adversely affect the steel industry?
The new mining policy has to be formulated and there is going to be a new mining Act, but currently we are discussing different issues in the mining policy. At this stage it would not be appropriate for us to discuss the details of the proposed Act.
You are supporting higher export tax of iron ore. But the domestic steel companies do not use 90% of the iron ore fines that is exported to China. Why do you want to save something that we are not using in the country?
Whether it is iron ore fines or iron ore lumps, or for that matter any natural resource of the country, it should be preserved for future use of the country. It is always better to export a value-added product to other countries... that will get us better realisation. Look at China, they are importing our iron ore fines and using it to produce steel products.
And they are saving their own reserves. We must learn from them. Indian steel industry is growing at a very fast pace. Within a few years we would be using the iron ore fines within our country and whatever reserve we have, needs to be preserved, keeping in mind the future needs of our steel industry. If we have to export anything, we should export steel, not its raw material.
Most of the iron ore mining in India happens in the unorganised sector. Post this duty, they will be out of competition. How do you plan to save the unorganised iron ore mining sector?
In the largest interest of the country, we will have to preserve our resources. I know there are some unorganised companies, but at what rate are they selling raw material? Tomorrow when our steel companies will need iron ore mines, where will we go then?
What is the update on SAIL-Posco joint venture?
We are at the negotiating stage with the Korean Steel maker to form a joint venture (JV) with steel major Steel Authority of India Ltd (SAIL). They have one of the best technologies to produce steel and we want it in our country. The company has also shown interest in setting up a JV in India. But it will take some time to strike a deal.
The steel ministry is actively asking SAIL and others to look for raw material integration outside India, but nothing has happened in the past few years. Why are we so slow?
A joint venture company was established some time ago called International Coal Ventures Ltd (ICVL) that was set up by NTPC along with SAIL, Rashtriya Ispat Nigam Ltd, Coal India Ltd and NMDC.
But it has not yet started working because Coal India did not show much enthusiasm after the formation of the company. And now they have started another company for this purpose. Well, I do not mind them forming a new company, as this is their decision. If one of the JV partners does not want to continue with us, it doesn’t matter. We have asked the others about their intention to stay in the company and do some serious work, because we need to produce results. If someone wants to exit the JV, we have no problems, but whoever stays will have to be serious.
There are vast opportunities in Africa, Indonesia and Australia to acquire iron ore and coking coal assets, but for that our company will have to work seriously.
The iron ore mine allocation has been rather slow in India and that has pushed back steel plants. Are you trying to expedite the system? If yes, how?
I hope this problem would be taken care of in the new mining policy. In the current system the allocation of mines is quite cumbersome and time consuming. First, it is the Centre that sanctions a mining project, after that it goes to the State government and then again comes back to the Centre. Let us see what shape the new mining policy takes. But I am sure we would certainly make the process of mine allotment a lot easier for companies.
Do you think steel prices will go up in the near future? If that happens, will you intervene to control prices?
You know it is a commodity and prices are linked to international markets. Since it is a de-regulated commodity, we cannot directly control prices.
Sometimes the prices go up and at other times they come down. Since January this year, the prices have increased, but it has not been a very significant rise in prices. But yes, if in the near future the prices go up significantly, then we can use our moral power to request companies to control prices as much as possible, for the interest of the country.
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