Regulatory agencies need to device legal framework and regulatory tools to gradually phase out old polluting technologies in the area of mining, the Competition Commission of India has suggested.
In its market study on ‘Dynamics of competition in the mining sector in India with a focus on iron ore’, the CCI has underscored the need to promote sustainable mining through regulations to gradually phase out ‘dirty’ technologies over time’.
A well-defined regulatory framework should encourage the adoption of clean technology and provide incentives for the transformation of existing production processes into sustainable modes of mineral production, it added. International practices to restore soil and forest cover, along with rebuilding ecological balance, is important for long-term sustainability.
The government has established a clean energy fund to support the development and adoption of clean energy technologies in various sectors, including the iron ore sector. The fund provides financial support for research and development of clean energy technologies and helps in the deployment of renewable energy projects, it added.
The market study highlighted that accumulation of unused low-quality iron ore has been a concern in the past, necessitating the adoption of advanced technologies from countries like Japan and China to beneficiate it into high grades without compromising cost advantages.
Respondents to the study had suggested that converting fines into pellets is an important option to minimise carbon emissions compared with other production methods. However numerous plants have refrained from adopting pelletisation due to existing investments in alternative facilities. In this regard, the government may introduce schemes like Production-Linked Incentive (PLI) for intermediary businesses, normally owned by relatively smaller players, to encourage the adoption of better technologies and thereby mitigate carbon emissions to a great extent, the CCI study has recommended.
Furthermore, promoting the use of solar energy in all plants can help complement their energy requirements with green technology, thereby contributing to environmental sustainability, it added.
Royalty issues
The CCI Market Study highlighted that royalty rates in the Indian market are currently higher compared with international markets, leading to increased compliance costs for mining companies due to various additional fees.
Introducing a uniform royalty rate could be advantageous, especially for small miners or new entrants, it suggested.
END PRODUCT BASED AUCTION SYSTEM
Currently, the same auction process for various products, ranging from steel to pellets, is raising concerns among both large and small plants.
It is said that small plants occasionally present higher bids for a smaller quantity of iron ore. Once they present their bid, the rate becomes applicable to all plants, which adversely affects the larger plants, as they have to purchase larger quantities at the same rate.
Small plants might be offering higher bids due to limited alternative options for raw material procurement.
In this regard, a separate auction for different categories of end users may be implemented, which will be beneficial for both sets of firms, the CCI study suggested.
An alternative suggestion may be to allocate a specific number of mines to smaller producers (like pellets, sponge iron, and pig iron) at a lower cost, it added.