In what some are calling a flip flop by the government the Ministry of Economic Affairs has proposed to the cabinet yesterday that mines be allowed to export raw minerals for the next two years to earn rupee.
The cabinet decision on this is still awaited but sources say that the cabinet had pressurized the ministry to come up with such a proposal in the face of the rupee crisis.
The decision comes as a dramatic shift in the mining policy of the government which until recently had been aggressively promoting export of only value added minerals through industries based captive mines.
In the last few years the government had managed to convince highly skeptical miners to value add raw minerals instead of exporting them raw. In fact miners complained that the government’s value addition standards were stringent.
A miner on the condition of anonymity said, “Eventually all of us fell in line because we realized that there were more profits for us, it was more sustainable and at the same time the nation could also get more revenue.”
Even the mother of all economic policy document the Economic Development Policy (EDP) has mentioned in several instances on value addition for export of Raw materials. The EDP says “Mineral based industries shall be permitted on evidence of substantial value addition and availability of raw materials.”
It also says, “The Policy shall facilitate the mining sector to overcome the challenges of essential resource constraints, environmental degradation and low value addition,” with respect to mining and quarrying.
The miner said that the MoEA’s proposal which is likely to be accepted by the cabinet is also violation of the EDP policy itself. He said that the EDP policy clearly mentions that any deviation from the policy can only be for a period of not more than a year.
However, in the case of this proposal it was to allow raw mineral exports for the next two years.
The two key minerals that could be affected by this decision would be eight to nine captive limestone mines owned by mainly cement factories and three to four quartz mines owned by Ferro Silicone factories.
A government official explained that the government was looking to boost rupee earning in the short and medium term through this measure.
He explained that the export of minerals would mean that factories who are using only a portion of their mining capacity can export the minerals they are not using to generate rupee.
He said that factories could also export low grade minerals that cannot be used in the factory.
Some miners say that they welcome the initiative to allow export of low grade minerals but are against export of high grade minerals.
However, there are also differences of opinion in the mining sector on the MoEA’s raw mineral export proposal. Some miners on the other hand are unhappy that the government is allowing export of raw minerals for only two years and not more.
BCCI President Ugyen Tsechup Dorji said, “If it is in the interest of the country we will welcome the government’s decision to allow export of surplus minerals but the two year period is too short for anyone to invest in and open a mine for exporting minerals.”
Government officials in the recent past have harped on the importance of value adding on numerous interviews and speeches.
Miners and business people point out that the two year allowance of export of raw minerals is a desperate and short-term move by the government that will neither benefit those in favor of value addition or those who want to export minerals in large quantities.