Appeal to Honourable Prime Minister of India to save the imperiled Beach Mineral Industries

09-07-2016

To

Honorable Prime Minister of India

Shri Narendra Modiji

South Block, Raisina Hill

New Delhi – 110 011

 

Sub:  Humble appeal to save the imperiled Beach Sand Minerals (BSM) Industry with more than 1 Lakh jobs to be affected/’Make It India’ and ‘Skill India’ vision may be unrealized

Respected Sir,

Under your able leadership, the Government is taking proactive steps for India’s industrial development, particularly via the ‘Make in India’ campaign to promote indigenous industry. Mining is one of the main sectors contributing around 2.5% to the nation’s GDP/economy. To boost this sector, the GOI came with the MMDR Act Amendment, 2015, followed by sector-wise rules. Though the Mineral Concession (Other than Atomic and Hydrocarbon) Rules, 2016 is positive and will boost development, a newly-introduced Atomic Minerals Concession Rules, 2016 (not there earlier), will totally eclipse India’s BSM industry.

Significantly, India possesses around 35% of the world’s BSM reserves. Although Indian Rare Earths Limited (IREL) was the major player in this sector for the past 50 years, they still do not have any full-fledged value addition project. As the production to reserve ratio was less than 0.001%, with only public sector companies working in this sector, the Department of Atomic Energy (DAE) opened this sector to wholly-owned Indian companies to boost the BSM sector. This had resulted in manifold increase in the production of BSM minerals and some private BSM producers have gone for value addition too. During 2015, India’s production to reserve ratio improved to 0.0018 – an 80% increase. Besides, export value soared from Rs35 crore in 1998 to Rs4,500 crore in 2015, resulting in substantial rise in exports. Out of the 81 BSM mining leases, 72 are with the private sector, which is also in the value addition of ilmenite, with preliminary work for zircon value addition in progress.

The new Atomic Minerals Concession Rules, 2016 (AMCR) stipulates that if the monazite content in the Total Heavy Minerals (THM) is equal to or more than 0.75%, deposits will be reserved for public sector companies and even existing mining leases can be cancelled and allotted to these companies. The AMCR is a new concept and no such rule existed prior to the MMDR Act Amendment, 2015. There are only two government BSM players in India: IREL and Kerala Minerals and Metals Ltd (KMML), which is a much smaller player in BSM but has a value addition plant for ilmenite, while IREL does not have any.

If the AMCR is implemented in its present form, almost all existing private players will be forced to close operations, resulting in huge losses and loss of employment to about 50,000 in backward areas of Tamil Nadu and Andhra Pradesh. It will also take the production to reserve ratio to an unviable figure less than that prevailing before opening of the BSM industry to private sector. The entire BSM industry will perish. If one reviews the pathetic 25% capacity utilization performance of IREL for the past decades, it has incurred more than Rs100 crore loss in 2015-16.

During 2015, even though private players were operating, India imported about Rs4,000 crore worth of BSM and value-added products. When the draft AMCR was published in April 2016, we represented our genuine concerns to the Ministry of Mines. The Government of Tamil Nadu, where the most BSM mines are located, also represented its problems. But these were not taken note of and, on 04-07-2016, at Raipur, the MOM published the AMCR. During discussions on this in a subsequent session in the mining conclave, MOM officials were unwilling to listen to any suggestions made by BSM producers. It may be noted that no discussions were held with stakeholders before finalizing the Rules.

If India achieves the production to reserve ratio of 0.01, the following benefits will accrue to the nation:

 Annual figures:

Direct employment:                      300,000 persons

Indirect employment:                   500,000 persons

Total capital employment:          Rs121,000 crore

Total turnover:                              Rs90,700 crore

Revenue to Governments:           Rs20,600 crore

Besides surplus thorium, this proposal will generate about 250 tonnes of uranium annually inside the country. Keeping national interests in mind, our association places the following requests before your Honourable self to save the India’s BSM industry in the national interest.

• Put in abeyance implementation of the first AMCR.
• Grant an audience to our association for a briefing on existing realities and problems.
• Help in facilitating exhaustive discussions of all stakeholders in the BSM industry.
• Instruct the MOM and DAE to work for the long-term development of the BSM industry without a partisan approach so that India can be an important player in the international arena.

We want to appeal that it will act as a death blow to the stagnating nascent industry including loss of livelihoods of millions living near the coastal region. As these minerals are basic raw materials for developing modern technology products, ranging from mobile phones to electric cars to defense guidance systems, we look forward to your urgent intervention to resolve this critical problem. We thank you for your time in reading this letter and look forward to your active support and guidance.

Yours truly

N.Pauldurai@Perumal