Representation to reverse the DGFT notification No. 26 of 2018

Copy of representation submitted to the Honourable commerce Minister is posted for information of our members

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To,

Shri. Suresh Prabhu,

Honourable Minister for Commerce,

Government of India, New Delhi

  

Respected Sir,

Sub: Export Policy of Beach Sand Minerals (BSM) in Chapter 26 of Schedule 2 of  ITC(HS) Classification of Export and Import Items 2018 – regarding.

Ref: Directorate of Foreign Trade Notification No. 26/2015-2020, New Delhi, Dated 21, August, 2018.

 

Our organization consisting of the private Beach Sand Minerals (BSM) miners, producers and exporters as members is concerned about the above referred notification and wish to bring the following facts for the consideration of the honourable minister for  perusal and consideration in the interest of the country.

This notification is a retrograde step in the development of Beach sand Minerals (BSM) in the country which is vital for the development of the country.

In the above notification Note 1 states “ Export of Rare Earth compounds classified as Beach Sand Minerals (BSM), namely (ilmenite, rutile, leucoxene (Titanium bearing mineral), Zircon, Garnet, Sillimanite and monazite (Uranium and Thorium), shall be regulated in terms of Sl. No. 98A of Chapter 26 Schedule 2 of ITC (HS) Classification.”

The above statement itself is fundamentally erroneous as the definition of rare earths given is totally wrong. Rare Earths is a group of 17 elements in the periodic table. Out of the above mentioned minerals, only monazite mineral contains  rare earths and no other beach sand mineral contain any trace of rare earths. Monazite contains around 65% of rare earth elements, 8-10% of thorium and 0.30 to 0.35% of uranium. Hence, the statement “Rare Earth compounds classified as Beach Sand Minerals (BSM)” is not at all correct and gives a totally false implication. We like to inform that none of the minerals other than monazite contain any trace of rare earths elements.

Only monazite mineral can be classified as “Rare Earth Compounds” and not any other mineral under BSM.

The beach sand mining in India is more than one century old. The first mining was started in 1908 when the beach sand containing monazite was mined and taken to European countries from the erstwhile Travancore state. Subsequently, processing facilities were set up to separate the minerals like monazite, ilmenite etc. in Manavalakurichi presently in Tamilnadu and Chavara, Kerala. Till 1965, only private players were in the field and the companies were producing and exporting around 3.00 lakh tpa of ilmenite. After taking over of the private industries in 1965 by Indian Rare Earths Ltd.,(IRE),  a government of India undertaking under the control of Department of atomic energy, IRE and Kerala Minerals and Metals Limited (KMML), a Kerala government enterprise were the only organizations in the field. Till 1998, these two companies were producing only around 4.00 lakh tones per annum of these minerals. This amounted to a growth of only around 30% from 1965 to 1998 ( a period of 33 years) which was around 2-3 % of the world production. After opening up of the industry to private sector for mining and production of all minerals other than monazite in 1998, the annual production of BSM in India had gone up to around 12.00 lakhs tones in 2012.  The private sector started production of ilmenite only in 2002 and zircon and rutile in 2006. This growth is phenomenal as within a period of  ten years the production had increased threefold. It may also be noted that India is the second largest producer of garnet in the world. It is pertinent to point out here that, India has 40% of the total world reserve of Garnet and 35% of total world reserve of Ilmenite.

Subsequently as per the recommendation of the National Planning Commission High Level Committee, Govt., of India de-listed Ilmenite, Rutile, Zircon, and Leucoxene and recommended Ministry of Mines to amend MMDR Act, to de-list the same from first schedule and DAE dispensed of the licensing procedure from DAE and directed to obtain license from Atomic Energy Regulatory Board under Radiation Protection Rules.

After opening up of this sector to private for BSM mining and production of the various minerals other than monazite, there was phenomenal increase in production and export of these minerals which affected the monopoly of the international producers as India became the main competitor. With a view to curtail the production and export from India, the foreign companies with the help of various vested interests in India started a campaign to malign the private producers. One of the main points raised in all these falsifications is illegal export of monazite. This false campaign had its own impact on the various government and other agencies and the genesis of this notification may also be the same.

Ever since the Atomic Energy Act was implemented in India, monazite export was banned and all other BSM products need to get a monazite content certificate for export of any consignment. Accordingly, Atomic Minerals Division (AMD) was the nodal agency to take samples and issue the certificate.  The export can take place only if AMD certifies that the monazite content is within the prescribed limit. But this procedure was dispensed with DAE as per the recommendation of the High Level Committee of the National Planning Commission (The report is available in http://planningcommission.gov.in/reports/genrep/rep_nmp.pdf and in page No. 168 to 182 relating to beach sand minerals). We represent DAE to reintroduce the Monazite  Test Certificate Procedure again and we are ready to bare the cost etc.,  But DAE did not agree our request indicating that there is no demand for monazite in overseas countries as it is freely available all over the world. Now DAE fix gadgets in all ports and airports equipped with facilities to measure the radiation level of consignments.

We also like to bring to the notice of all concerned that the canalising of the export is proposed through Indian rare Earths Limited (IREL), which has vested interest in this business, them being one of the producers of these minerals and a competitor to our members. Making them as the canalizing agent for BSM minerals will have the following implications:

1. For each mineral, there are different quality specifications which may not be in the range of IREL, resulting that IREL representative will not be able to understand the implications and will cause hurdles in the export of these minerals.
2. The marketing of the products by our members is totally different than that of IREL. Our members produce the minerals as per the required specification of each buyer. And this will result in the representative of IREL not understanding of the real situation and will result in delay of exports.
3. There is a likelihood that IREL may underquote to the customers once the price at which our members sell to their customers through this process which will affect the export from our country and also the business of our members.
4. IREL is likely to charge exorbitant amounts for their services to make up for their operational losses as at present, which may make our export business unviable, as this will be additional expense for our members.
5. This notification is brought with immediate effect. Our members are  at the various stages of executing their orders and IREL is not tuned to handle this with immediate effect. Many of the consignments are at the stages of transportation to the ports, stock at the port, vessels already commissioned and vessels partially loaded. What will happen to these cases?”
6. The delay by IREL is likely to result of pour members losing their export orders.

If the present notification is implemented, the private sector enterprises in the BSM sector will be totally wiped out in India resulting in import of all the country’s requirement of BSM and their derivative products draining valuable foreign exchange and more than 50,000 people will loss their employment who get direct / indirect employment by way of beach mineral industry.

Moreover if, these minerals are not utilized for our nation’s development by way of export, there are possibilities that these resources may become waste due to the Technology development and there is possibilities to transported to the nearby countries by way of wave action and sea current.

It is worth mentioning that for these minerals, normally long term export contracts for more than three years are signed when the prices are high. There are many pending contracts valid till now and if not honored, the Indian companies will have to pay huge penalty as damages. Further, valuable foreign exchange will also be lost. We could not recapture the overseas market developed for the last 20 years.

Hence, to ensure the country’s interest and the interest of the miners and exporters, and to ensure that monazite does not leave the country, the following alternative action plans are recommended:

1. The  practice of monazite certificate from a designated authority as was prevalent till 2007 may be re-introduced as a pre-requisite for export of BSM and the producers may be allowed to export all the BSM other than monazite as was practiced till 2007.
2. If the government feels that canalisation needs to be implemented, a separate agency who is not a producer of the BSM may be appointed for this purpose so that both private and public sector is brought within the purview of this agency.
3. The producers may be allowed to export the minerals till the agency is appointed and the formalities are over. It is suggested that if at all required to have a canalizing agency, an incubation period of atleast three months may be allowed for appointment of this agency and till such time the producers may be allowed to export their products as was done till now.

It is requested that the honourable minister looks into this matter in detail and instruct to make necessary modification in the notification considering the various aspects  indicated so that national interest is of primary interest.

Yours truly

N.Pauldurai @ Perumal

President

Beach Mineral Producers Association.