KOLKATA (miningweekly.com) - India’s Steel Ministry has proposed auctioning off iron-ore mines to steel producers through a competitive bidding process to ensure a level playing field and augment raw material security for higher steel production.

According to the draft National Steel Policy, which was currently being circulated among all stakeholders, weak raw material security for the industry was one of the major reasons for poor progress in steel production capacity enhancement and the government would attempt to correct this through the allocation of captive iron-ore mines through open bidding for all prospective reserves.

The government would also put up for auction all captive iron-ore mines that had been allocated to steel producers, but which had not been made operational or had not had investments made into these reserves to date, the draft policy added.

According to current practice, iron-ore reserves were granted to steel producers for captive mining by provincial governments, with approval of the concession by the federal government.

The policy warned that the increasing importation of iron-ore to meet the growth in steel production would, in the long term, undermine the competitiveness of domestic steel companies and advocated the gradual phasing out of iron-ore exports as a solution to establish steel producers raw material security.

It also proposed setting up an inter-Ministerial group to lay down a roadmap for the phasing-out of iron-ore exports from the country.

According to mining industry estimates, India imported about eight-million tons of iron-ore during April to December 2012, while exports amounted to 15-million tons during April to November 2012, down 60% over the corresponding period of previous year.

Indian iron-ore production during 2012/13 would be between 70- and 100-million tons, down from 208-million tons in 2010/11. If current levels of exports, at 50% of production, were maintained, only about 35-million tons of ore would be available for domestic steel production. With yearly steel production pegged at 70-million tons, the quantum of iron-ore available from domestic sources would necessitate continued dependency on imported raw material.