Smaller steel players oppose mining area limit removal

Mumbai: A group of smaller steel players and associations are opposing the Centre’s proposal to remove the statutory area limits on the acquisition of mining leases for specific minerals, as they believe it could lead to monopolisation of natural resources by larger players. This, in turn, could lead to an artificial shortage in supply and a jump in prices, they said.

The proposal is also contrary to the stance taken by the government in 2022. The government is proposing a change in the Mines and Minerals (Development and Regulation) Act, 1957, for which it has put out a public consultation letter at the start of the year.

“There are about 30 minerals in India, and one or two large companies in each of these, which will be looking to acquire large assets,” a senior industry official said. “So companies with deeper pockets will continue to increase their area, while smaller players will not get a share of these minerals.”


Under Section (6) of the Act, there is a limit of 10,000 sq km for a reconnaissance permit, 5,000 sq km for exploration licence, 25 sq km for prospecting licence and 10 sq km. for a mining lease. The government is currently empowered to increase the area limits for a prospecting licence or a mining lease for particular minerals in particular areas.

“Allowing acquisition of disproportionally large mineral bearing areas would defeat the present system of auctioning of mineral concessions through fair and transparent mechanism,” the government had said in its public consultation in 2022. “There is need to fix the area limits rationally to ensure that there is a fair and equitable chance for allocation of natural resources for common good.”

The proposal to remove these statutory limits is in divergence from the stance taken by the government in 2022, the Pellet Manufacturers' Association of India said in a letter to the ministry. ET has seen a copy of this letter.

“Considering the importance of policy continuity and the broader objective of equitable distribution of mineral resources for the common good, we believe that the proposal warrants further careful examination,” said the association, representing 31 pellet manufacturing companies.

India, which is the second-largest producer of steel in the world, gets 55-60% of its output from primary steel producers, with the rest coming in from secondary producers, including sponge iron producers. The Utkal Chamber of Commerce and Industry cited a similar concern, asking for the policy to be reconsidered. Given that investment decisions in these capital-intensive industries are typically long-term, the association said any relaxation, if necessary, should be done in a calibrated manner.