User industries will have to pay prevailing fair market price to mining lessees

The State government has directed at least 50 per cent of the iron ore lumps and 50 per cent of the fines raised from the mines in any month, but not put to captive use by the lessees, would be sold to the stand alone mineral-based industries.

With shortage of iron ore supply to State-based industries posing a challenge to maintain steel-making capacity and threatening to affect prospects of upcoming steel plants, the State government had been under pressure to ensure constant supply of raw materials to industries.

User industries will have to pay prevailing fair market price to mining lessees for the ore supply.

“These instructions will be effective from the December, 2012 and remain in force until further orders,” Steel and Mines Secretary Rajesh Verma wrote to Director of Mines on Wednesday.

“In spite of the State having adequate reserves of iron ore, representations are being received from the State-based iron and steel industries that they are facing acute shortage of raw material and the production in the industries has been severely affected on account of non-availability of iron ore,”

Mr. Verma noted. He added, “on account of shortage of raw material, while a few of them are facing closure, others are experiencing low utilisation of their existing capacity. T

here is every likelihood of such a situation having adverse socio-economic consequences such as unemployment and loss of wages. Besides, such a situation will also have an adverse impact on investment climate and industrialisation process in the State, thereby hampering the growth of the economy of the State”

Justifying issuing of such instruction, the government said the State is the owner of the resources and the minerals within its territory. “As the industries are facing acute shortage of raw material, the situation warrants the immediate intervention of the State government.

It has, therefore, become necessary in the greater public interest to take measures to make adequate raw material available to the State-based industries so as to maintain the pace of industrial growth and avoid the adverse socio-economic consequences.”

The State government has invoked clause (m) of sub rule (1) of rule 27 of the Mineral Concession Rules, 1960 that states “the State government shall at all times have the right of pre-emption of the minerals won from the land in respect of which the lease has been granted: Provided that the fair market price prevailing at the time of pre-emption shall be paid to the lessee for all such minerals”.

Deputy Director of mines and mining officer incharge of mining circles have been asked to intimate the decision to all lessees.

According to the State industries department, private companies have signed memorandum of understanding with State government for setting up of 50 steel projects at a whopping Rs. 2,00,000 crore worth investment. Although partial production has already commenced in case of 30 in steel projects, not all projects have dedicated ore linkage.


  • Despite having adequate reserves, State-based industries are facing shortage for raw material

  • State invokes clause (m) of sub rule (1) of rule 27 of the Mineral Concession Rules, 1960