Briefing reporters on the salient features of the policy, Mines Ministry secretary J P Singh said that China has the capacity to utilise iron ore with iron content as low as 30 per cent and India needs to match that.

“The challenge before us is not of scarcity of ore but proper exploration of it. Our benchmark right now is 55 per cent iron content. We still do not have requisite capacities for beneficiation and if we continue this way, then iron ore will last 140 years,” Singh said. “According to my estimates, if we are able to utilise 45 per cent iron content ore, then the duration will go up to more than 200 years. If we can match China then it will be even more.”

The country produced 181 metric tonne (mt) of iron ore last year of which 50 per cent was exported. Of the exports, 74 per cent was in the form of fines. A further 37 per cent of the ore mined is being used by companies like Tata Steel and Steel Authority of India Ltd (Sail) as captive resources.

Singh also cast aspersions on the steel ministry targets that have recently been revised. “The steel ministry earlier said that 110 mt steel would be produced in the country which was upscaled suddenly to 200 mt. I do not know which one is closer to the truth.”

Some of the salient features of the policy include seamless transition from regional exploration (RE) to prospecting leases (PL) to mining leases (ML) while unbundling the three processes from each other. As a result, companies may indulge in any of the processes and then transfer it to another company to complete the chain.

“In other countries there are companies which are very good at reconnaissance and transfer their leases or sell data after that. We want the same model here so that mining is done scientifically,” Mines minister Sis Ram Ola said. The policy is expected to treble investment in the sector from Rs 18,000 crore to Rs 55,000 crore in the next 4-5 years.

The issue of royalty rates, though covered under the policy, has, however, not been approved by the Cabinet. The policy has recommended ad valorem rates for some of the minerals like iron ore, graphite and uranium. The revision is expected to result in rationalisation of royalty accruals to states — especially in case of iron ore whose prices have gone up appreciably. Accruals for major mineral producing states are likely to increase from Rs 2,014 crore in 2006-07 to Rs 3,943 crore.

Digging out the policy’s core

•Absolute right of prospector to obtain mining lease where requisite work has been done

•Unbundling of prospecting from mining, whereby prospector can invest, find and sell data

•Two new concessions in the form of non-exclusive reconnaissance operations and large area prospecting license

•Mining companies to spend a percentage of turnover on social infrastructure as CSR

•Ad valorem basis royalty system that will accrue Rs 3,943 crore for state governments

•Increase in dead rent on escalating scale on unused areas to dissuade idle holding of resources

•Several fold increase in penalties on illegal mining

•Setting up an independent Mining

Administrative and Appellate Tribunal that can be approached by the applicant if time limits are flouted by the Centre or state governments