KOLKATA (miningweekly.com) - Indian miners have blasted the government decision to promote only the exports of value-added iron-ore, calling it “fallacious”.

Miners claim that being competitive in the production and export of iron-ore does not necessarily mean that conserving the same for domestic operations would improve India's competitiveness in steel production and steel product exports.

The Federation of Indian Mineral Industries (FIMI) said in a statement that domestic demand, and not the availability of raw material, determined whether production facilities would be established.

The mining industry has pointed out that there was little correlation between the availability of raw material and competitive production and the marketing of steel products. This was amply vindicated by the fact that Australia and Brazil were large exporters of raw material, with a small steel production base and quite the opposite in the case of large global steel producing countries such as Japan and South Korea.

“The contention that just as India was competitive in exporting iron-ore does not necessarily mean that it will also be competitive in steel production and exports. This can be exemplified by India being competitive in exports of cotton and textiles but not ready-made garments where Bangladesh has an edge,” FIMI secretary general R K Sharma said.

He said that despite exporting raw materials for steel and aluminium, Australia produced 5.6-million tonnes of steel and 1.68-million tonnes of aluminium in 2014, while Brazil produced 33.9-million tonnes of steel and 0.96-million tonnes of aluminium in the same year.

“The underlying reason for that is that there was not enough demand for steel and aluminium in these countries,” Sharma said, adding that creating demand that would justify steel and aluminium production capacity creation rested with the government.

The immediate trigger for the sharp reaction from the mining industry was the Indian government’s move to set up a special committee of experts within the National Institute for Transformation of India Aayog, the government’s policy think-tank.

The mandate of this committee would be not to "discourage" exports of iron-ore from India, but at the same time lay out the roadmap for greater value addition and raw material security for value addition contributing toward the government’s 'Make in India' programme.

The task of the panel would be to reconcile the differences between standalone iron-ore miners and domestic steel mills, without captive iron-ore mines, which invariably took diametrically opposite stances on various policies pertaining to the mining industry.