By Sanjeev Shekhar
The present global financial crisis has severely dented the economies of many developed countries. India on the other hand, due to superior governance and stupendous growth shown by some key business sectors, have managed to reduce the impact of this crisis on its economy and is highly expected to achieve a decreased yet significant GDP of 7-7.5% by the close of this financial year.
The Indian steel industry though impacted with steep fall in demand has greatly contributed towards the sustainability of the economic growth uptil now. The Ministry of Steel aims to achieve a steel production of 110 Million Tonnes by 2010-11 and 200 Million Tonnes by 2020. The three eastern states of India, especially Jharkhand, has the one of the richest iron ore resources in the country and is expected to the play a significant role in helping the country in achieving the steel targets for the 11th and subsequent 5 year plans.
India will only be able to match the world’s largest producers of steel like China and Japan, provided various State Governments allocate on a priority basis the precious iron ore resources to large scale projects promoted by the most eligible and credible steel producers, instead of small capacity projects which in most cases neither contribute to the infrastructural development of the region nor scientific development and optimum utilization of the mines, nor are able to adhere to the stringent environmental norms – purely because their project size is unable to absorb such huge costs. They can also not match our growth requirements.
A total of 74 MOUs have been signed in Jharkhand for Mega Investment in setting up Steel, Power, Cement & Sponge Iron plants at a proposed investment of Rs. 2,93,802 crores. Of the total 75% of the companies which had signed the MoUs are yet to acquire land and a same percentage are yet to file Detailed Project Reports to the concerned authorities. As far as ground level implementation is concerned only 18% companies have started the first phase of their production and that these are mostly sponge iron plants. It is not suprising that in the last five years (since the signing of the MoUs) only approximately 5,700 direct employment opportunities have been created by these private players till date, as compared to the committed 200,000 jobs. Such a scenario has resulted in poor financial condition of the farmers who gave their land willingly in the hope of better future and living conditions.
Inspite of such a poor track record the present Jharkhand Government has not learnt any lessons and continues to jeopardize the development potential of the state and it’s resources. The government continues to favor adhoc and non-planned allocation of precious mine resources to projects which will not significantly contribute to the development of the state’s mineral based industry. The change in Chief Ministership does not seem to have brought any change in this perspective.
In light of the current recessionary trends many key entrepreneurs have also deferred investment in new steel plants despite having acquired iron ore blocks. It is noteworthy to mention that apart from couple of major players like SAIL and Tata Steel, most of the smaller steel/mining companies are producing sponge iron, which does not justify allotment of mining leases to them.
The recent case of the Chief Minister giving it’s go ahead to allocate the lucrative Ghatkuri mines which was reserved for the Public Sector Units to private sector companies which are proposing to set up small capacities is another example of State’s adhoc and totally adverse policy for the development of the iron ore potential of the state. Inspite of the fact, that Ghatkuri RF is reserved for allotment to PSUs only for the purposes of superior mineral development, State Government had not bothered to check this fact and instead recommended allotment to few private steel players.
The CM’s nod for allotment of Ghatkuri iron ore mines to private players, is clearly going to undermine the PSU’s iron ore interest such as that of SAIL which has committed to set up 15 million tonnes Greenfield steel plan in Jharkhand with the total investment of Rs 60,000 Crores and was also an applicant for allotment of the iron ore mine in Ghatkuri. Inspite of the creditibilty and commitment of SAIL as a PSU towards the socio-economic development of the region the CM has for reasons best known to him has chosen to undermine the development potential of the Ghatkuri region and interest of the people at large.
Ghatukuri RF has a total mineable area of 3,000 hectares, out of which the 6 private steel companies who have approached the Supreme Court, require mining leases on an area of 2700 hectares. Most of the companies are planning to set up capacities in the range of 1 million tons. Given the past track record will not be surprising that these applicants are not serious in their endeavor and are using the opportunity to block the scares commodity. Allocation of mines to small projects will also lead to unscientific mining.
It is hoped that the Government will all the precious resource to those who will undertake suitable development of the mine and are committed to setting up large steel plants in a time bound manner.
Sanjeev Shekhar
Journalist/Media Consultant
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