Cement cos fear neither govt nor imports, hike prices
Economic Times, 07-07-07

Softening global prices and rupee appreciation may have made steelmakers cut prices to remain competitive vis-à-vis imports, but cement makers are still hiking prices, for they hold no such fear. Foreign manufacturers wishing to export the commodity to India need Bureau of Indian Standards (BIS) certification, the first of which may take at least one-and-a-half months. Till then, cement makers can safely hike prices depending on domestic demand.

Prices have gone up by Rs 3-5 per 50 kg bag across most regions. The southern region has, however, witnessed a steeper hike of Rs 8 in the past week and dealers in the region fear more in the coming week. Cement makers, including ACC, Grasim and India Cement, refused to confirm or deny if prices have been hiked by the companies, with some blaming dealers for the hike. Surprisingly, the price hike has come despite government’s protracted efforts at reining it in. In a bid to cool off domestic prices, the government had waived all duties on cement import. But little cement has so far been imported.

In view of the time-taking certification procedure, DIPP secretary Ajay Dua had signalled that imports from foreign manufacturers, certified by international private certifiers like Lloyds or SGS, may be allowed. A month has gone by, but not much headway has been made on this. Builders’ Association of India president PR Mundle says the government must step in and arrest the upward price movement, else it would impact the whole economy. But with inflation having climbed down below 5%, some analysts believe, government may be less inclined to control cement prices.

Cement and steel are two sectors where rising prices in recent times has raised government hackles, which repeatedly asked manufacturers to reduce prices. But cement makers refused to toe the government line prompting the latter to initiate several price-control measures. Under pressure, cement makers, however, promised to hold the price line for a year even if input cost increased. They also promised to pass on any benefit arising out of excise duty reduction to the end consumer.

GoM supports ore exports, value addition
Economic Times, 07-07-07

A GROUP of ministers (GoM) on Friday cleared the National Mineral Policy that retains the freedom of mining companies to export iron ore without restrictions on quantity or quality. The policy will now be sent to Cabinet for final clearance.

The issue of iron ore exports had created a rift between the mining and steel industries. In fact, the sharp differences over the issue resulted in delays in finalising the policy. While the steel industry supported a cap on iron ore exports to meet the requirements of the growing steel industry in the country, mining industry favoured unrestricted exports citing comfortable reserves position on iron ore.

“The GoM has accepted the views of the mining industry while recommending no changes in the guidelines for exports. The Hoda Committee constituted to recommend the new policy also favoured this,” a source in the Planning Commission told ET.

The decision also clears the cloud over Posco’s proposed steel project in Orissa that has proposed to export some portion of ore from its captive mines. The company has proposed the exports to enable it to import high-grade ore required for mixing.

However, in order to facilitate value addition within the country and boost steel production, the new policy has given more powers to the state. The state governments will be able to give preference to companies undertaking value addition within the state while allotting iron ore mines. This will mean standalone mining activities will be disincentivised. However, the entire country will be treated as one economic region and states will have to permit transfer of ore outside the state if no one is willing to put up a plant there.

Moreover, the GoM has decided that a balanced policy will be followed while granting captive iron ore mines to steel companies. The policy will, therefore, provide captive mines to all steel units in operation up to July 2006.

While approving the mineral policy, the GoM has retained most of the recommendations of the Hoda Committee. Accordingly, the policy will now aim towards procedural simplification for attracting investments in the sector.

It will also benefit the states as under the new policy, the present system of specific rate royalty will shift to ad valorem rate of 7.5%. Once notified, the proposal will increase royalty earnings by almost six times. For example, royalty earnings from iron ore of five ore producing states work out to Rs 250 crore. This will increase to Rs 1,250 crore under the new regime.

However, the new policy will also clip some of the powers of the states. The states sitting over mining applications of companies will be penalised as delays will transfer their powers to the Centre.

Another important aspect of the new policy is that a process of competitive bidding can be initiated for allocation of captive coal blocks. This is presently done by a screening committee within the coal ministry. The bidding process will also be started for all other major minerals.

Besides, the government will auction mining areas where full prospecting has to be done. This will require amendments to the Mines and Mineral (Development & Regulation) Act, 1957, that is likely to be introduced during the monsoon session of Parliament.

Under the new policy, companies will have to earmark 3% of turnover for undertaking rehabilitation and resettlement of displaced people under a sustainable development model. However, the ministry of environment and forests will work out fresh guidelines separately to introduce environment-friendly mining practices in the industry.

Urban infrastructure needs public-private drive to get off the block: Jaipal Reddy
Financial Express, 07-07-07

Union minister for urban development S Jaipal Reddy said public-private partnerships (PPPs) were needed to carry out urban infrastructure development projects in India.
He said though the Centre and the states had earmarked Rs 1 lakh crore under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), it would not be adequate to carry out infrastructure projects.

“We need hundreds of millions of crore, which cannot be generated only by the government,” he said adding that by 2025 nearly 50% of the population or 700 million people were expected to live in urban areas. Reddy said PPP model projects with transparency, stability and sustainability should be encouraged in the country to meet this demand.

He said infrastructure projects worth Rs 5,500 crore had been sanctioned till date for southern states under JNNURM. “JNNURM has received good response from the state governments,” he said while delivering the keynote address at Suminfra 2007, a summit on sustainable PPPs in infrastructure, here on Friday. Already city development plans for 63 cities across the country were submitted to the Centre under JNNURM.

He said priority had been given to projects related to four major sectors—drinking water, sewerage, storm water drainage and solid waste management. These four segments attracted 77% of funds earmarked till date under JNNURM, he added.
Earlier in his inaugural address, Karnataka chief minister HD Kumaraswamy said the state government has planned petroleum, chemicals and petrochemicals project in Mangalore. An area of 300 sq km will be earmarked for the project, of which over 150 sq km will be the processing area. “The proposal is being formalised and will be sent to the Centre soon,” he said.

Similarly, he said the government has already commenced projects to develop greenfield regional airports in Bijapur, Gulbarga, Hassan, Kushalnagar, Raichur and Shimoga.
“We are requesting the Centre to allow utilisation of defence airports at Bidar and Karwar for commercial civilian flights. This proposal, if approved, will further supplement the state government’s vision,” he said.

He appealed to the Union urban development ministry to provide assistance for the development of infrastructure services in the tier-II cities and sub-urban areas of the state.

Ministers clear mineral policy, no ore exports cap
Mint, 07-07-07

The policy seeks to expedite mining applications and allow steel companies makers to own mines
A group of ministers cleared India’s new mining policy but rejected a demand from domestic steel manufacturers for a cap on iron ore exports.

The policy, which will now be put before the cabinet for approval, seeks to expedite mining applications and allow some steel companies to own mines. The government hopes that these changes will help attract an estimated foreign direct investment of $2 billion (Rs8,000 crore).

“The GoM has decided there will be no cap on iron ore exports. The issue of upward revision of export duty (on ore exports) was also not discussed,” said an official close to the development.

As present, there is no cap on the export of ore. But steel makers want the exports to be regulated or banned completely so as to feed their own plants with scarce ore. The steel sector had made elaborate presentations on why ore should not be allowed to be shipped out of India in earlier meetings of the GoM.

The draft policy put together by a committee that was headed by Anwarul Hoda, a member of the Planning Commission, was in favour of exporting surplus iron ore, after domestic consumption was met.
The official said the recommendations of the Hoda Committee have been accepted. “Even the environmental issues suggested by the committee have largely been accepted but for minor details,” he said.

He added that the GoM had approved “seamless and guaranteed transferability of mining operations”. This means that companies, whicho get an initial survey licence to identify a potential mine, will also get preference in the grant of the actual licence if their prospecting bears fruit.

Experts say the way forward is to deregulate the sector and set out clear guidelines. “In order to get more investment, both from private and foreign companies, the government needs to make the mining sector more vibrant and conducive for investors,” said Arvind Mahajan, executive director, KPMG Advisory Services. He added that this would include setting out clear guidelines on environmental issues.

As recommended by the Hoda committee, the GoM also ruled that state governments should force a company to which they were granting a mining licence to locate its processing plant within the state. Jharkhand , Chhattisgarh and Orissa wanted companies that process iron ore to source it from the state (or use it to make steel) and locate their plants within the borders of the respective states.

To ensure that states do not favour new entrants that are making substantial investments, GoM said steel firms which existed in July 2006 should be given preference while allocating captive mines.

The group is headed by Union home minister Shivraj Patil, and includes steel minister Ram Vilas Paswan, minister of state for mines Sis RamOla, commerce and industry minister Kamal Nath and power minister Sushil Kumar Shinde.