Scope of mining policy: force closure of operating mines; a case study

Abstract

New Mineral Policy, 1993 and subsequent Policy in 2008 and 2010 has brought in the paradigm shift in policy in line with globalisation by opening mining sectors to foreign investors, encouraging FDI, granting licences liberally to tap the potentiality of the sector except in solid fuel sectors (coal and lignite). Subsequently amendment in the MMDR ACT, 1957 and MCR,1960, long pending issues been addressed substantially bringing transparency in allocation and other related matters towards its administrative efficiency subject to its effectiveness to be determined in future. Till 1997, Hindustan Copper Limited (HCL) was the only vertically integrated producer of primary refined copper with installed capacity of 47,500 tonne per annum. After globalisation of market, M/s Hindalco Industries, Sterlite Industries (I) and Jagadia Copper (based on recycling of old scraps and rejects) entered into domestic market and India became net exporter of refined copper. During late 1990s and early 2000s, world price of copper (LME) fell continuously and M/s HCL gradually went into losses for consecutive years. All the six captive working underground copper mines at Ghatsila, West Singhbhum, Jharkhand were closed and capital machineries were also sold against the will and opposition of trade unions and local management rendering about 10000 persons jobless directly and thus disturbing the socio- economic eco-system of the sensitive tribal area. Again, as the copper price started rising in 2003, decision was reversed in 2006 to reopen some of mines to take benefit of rising copper price and increasing demand. But due to legal procedures and high gestation periods, only one mine could be started in late 2008 outsourcing operation to a foreign based domestic company on contract. Thus, in spite of having competitive advantage of having captive mines, M/s HCL couldn t compete with the Private companies. Again, abandoning/dismantling mines was not a wise decision, as existing scare reserve of mineral limited to geographical dispersed areas could be extracted only after few years due to high market price in near future. Thus, the opportunity was lost by way of employment generation, revenue realisation, augmentation of the local economy causing loss to the society and the exchequer but without any liability of the decision. My policy paper highlights the crisis, analyses the problems and try to find the possible solutions in such information asymmetries so as to have a reasonably justified policy and the strategy in future to mitigate such situations vis-a-vis scope of such policy decision to explore the possibility of government intervention for sustainable development of natural resources for public interest and incorporating such provision in mining policy and legislation in the light of recent development in policy framework.