INTEGRATION OF STEEL UNITS

(a) whether, on the lines of oil and bank sectors, the Government proposes to merge all the Steel Public Sector Undertakings (PSUs) with the Steel Authority of India Limited (SAIL);

(b) if so, the details thereof;

(c) the objective behind merging of the steel PSUs;

(d) whether the Government has proposed to write off all the debts of steel PSUs before merging them with SAIL;

(e) if so, the details thereof ;

(f) whether interests of the employees have been protected/proposed to be protected before and after merger of these PSUs;

(g) if so, the details thereof ; and

(h) the extent to which this merger is likely to increase the steel production in the country?

a)&(b): The Government has approved the merger of Indian Iron and Steel Company Limited (IISCO), a wholly owned subsidiary of Steel Authority of India Limited (SAIL) with SAIL. SAIL will take over all obligations, rights and liabilities of IISCO, including its permanent employees without any interruption in their services. There is no other formal proposal at present for merger of Steel Public Sector Undertakings (PSUs) with SAIL.

(c) Merger with SAIL will provide the much needed investments in IISCO to improve its performance. Also, there would be optimum utilization of raw materials available with both SAIL and IISCO.

(d)&(e): No debts of IISCO have been written off in the approved process of merger

(f)&(g): While approving merger of IISCO with SAIL, the interests of the employees have been protected and they will in fact benefit by way of improved pay/wages on the lines of SAIL.

(h) There would be no additional capacity added to SAIL as IISCO is a subsidiary of SAIL.

FALL IN PRICES OF STEEL

(a) whether there has been a continuous fall in the prices of steel for the last two months;

(b) if so, the reasons therefor;

(c) whether the sale of steel in the local market has been at its highest during the last year; and

(d) if so, the details thereof and the reasons therefor?

(a) Yes, Sir. The steel prices have declined since May 2005 and the trend has continued in July 2005.

(b) The domestic steel prices are pegged with the steel prices in the international market. There has been a softening of steel prices in the international market and therefore the prices in the domestic market have also declined.

(c)&(d): The consumption of finished steel during 2004-05 was 33.40 million metric tonnes (provisionally), showing an impressive growth of 7.86 per cent over the consumption during 2003-04. The higher consumption is attributable to strong domestic demand for iron & steel arising due to growth in the industrial sector in general and in the construction activity in particular.

JOINT VENTURE OF KIOCL WITH SAIL

(a) whether Kudremukh Iron Ore Company Limited, a Public Sector Undertaking is going to set up a joint venture undertaking with Steel Authority of India Limited; and

(b) if so, the State-wise details of the plants proposed to be set-up?

(a)&(b): Kudremukh Iron Ore Company Limited (KIOCL) has entered into an Memorandum of Understanding with Steel Authority of India Limited (SAIL) on 28.9.2004 to form a Joint Venture Company to explore and mine iron ore at Kalta, Taldih and Barsua Mines in Orissa State.

DEVELOPMENT OF STEEL PLANT AREAS

(a) whether the Government is taking steps for the peripheral development around the steel plants;

(b) if so, the details thereof along with the cost involved therein; and

(c) the details of the work done for peripheral development of Steel Plants till date along with the utilization of funds allocated therefor, Plant-wise?

(a)to(c): Steel Plants in the Public and Private Sector undertake various steps/ activities for peripheral development around the steel plant areas. The plant-wise details of various schemes/ activities undertaken by Public Sector Steel Plants have been classified under various categories of services. Plant-wise details of expenditure incurred on these peripheral development activities are given as under.

Bhilai Steel Plant (BSP)

(a) Education
(b) Drinking Water
(c) Road Development
(d) Health Care
(e) Cultural Activities

During 2002-03, 2003-04 and 2004-05, BSP has spent an amount of Rs. 23 lakh, Rs. 42.25 lakh and Rs.50.01 lakh respectively on the peripheral development work.

Rourkela Steel Plant (RSP)

(a) Drinking Water
(b) Health Care
(c) Community Development
(d) Education
(e) Recreation
(f) Economic Development

During 2002-03, 2003-04 and 2004-05, RSP has spent an amount of Rs. 9.62 lakh, Rs. 10.47 lakh and Rs. 94.75 lakh respectively on the peripheral development work.

Bokaro Steel Plant (BSL)

(a) Drinking Water
(b) Education
(c) Road Development
(d) Health Care

During 2002-03, 2003-04 and 2004-05, BSL has spent an amount of Rs. 23.08 lakh, Rs. 20.59 lakh and Rs. 73.40 lakh respectively on the peripheral development work.

Durgapur Steel Plant (DSP)/ Alloy Steel Plant (ASP)

No direct peripheral activities around DSP/ASP were taken up due to financial constraint during the years 2002-03 and 2003-04. However, an amount of Rs. 60.4 lakhs has been spent on peripheral development work during 2004-05.

Visvesvaraya Iron & Steel Plant (VISP)

Initially the development in the peripheral areas was undertaken by VISP and later on the Slum Board of Govt. of Karnataka has taken over the development of drinking water, street lights, sanitation, roads etc. VISP has not spent any amount on this account during the years 2002-03 and 2003-04. However, an amount of Rs. 8.95 lakh has been spent on peripheral development work during 2004-05.

Salem Steel Plant (SSP)

(a) Drinking Water
(b) Education
(c) Road development
(d) Health Care

During 2002-03, 2003-04 and 2004-05, SSP has spent an amount of Rs. 0.23 lakh, Rs.0.75 lakh and Rs. 3.55 lakh respectively on the peripheral development work.

Visakhapatnam Steel Plant (VSP)

Visakhapatnam Steel Plant has undertaken various activities towards the peripheral development work. Expenditure incurred on these activities since its inception i.e. 1993 to till date is given hereunder.

During 2002-03, 2003-04 and 2004-05, VSP has spent and amount of Rs.2.80 lakh, Rs.5 lakhs and Rs.9.5 lakh respectively on the peripheral development work.

AGREEMENT WITH POSCO

(a) whether attention of the Government has been drawn to the recent MoUs signed between POSCO, a steel company and Government of Orissa in regard to setting up steel plant at Paradip with mining rights;

(b) whether specific objections to the provision for export of iron ore from the state and also several issues, which are against national interest have been raised;

(c) is so, the details thereof;

(d) whether the Government has initiated any action in this regard; and

(e) if so, the details thereof?

(a) Yes, Sir.

(b)&(c): Yes, Sir. Concerns have been expressed over assuring 600 million tonnes of iron ore to POSCO, provision of mining lease instead of providing iron ore at market rate, exchange of 30 per cent of iron ore as mentioned in the MoU, exhausting iron ore reserves of Orissa, Central and State Government not getting any revenue by providing the facility of Special Economic Zone, evacuation of large number of people, issues related to displacement and uncertainty in giving priority in employment to the local people.

(d)&(e): The concerns raised have generally been addressed in the MoU signed between the Government of Orissa and POSCO. The Government of Orissa has also furnished required clarifications in all the local newspapers of the State.

PRODUCTION OF IRON ORE

(a) whether the Government has formulated any scheme to increase the production of iron-ore in the country;

(b) if so, the details thereof;

(c) the details of the production of iron-ore in the country during each of the last three years;

(d) whether the Government has set any target for production of iron-ore in the country during the current year;

(e) if so, the details thereof;

(f) whether the Government proposes to frame any long-term policy on export of raw material; and

(g) if so, the details thereof alongwith the steps proposed to be taken to contain the price of steel?

(a)&(b): Production of iron ore in the country is undertaken by various mining companies and steel plants operating captive mines. The Government, thus, on its own does not undertake any production of iron ore and hence the formulation of any scheme, by it, to increase production of iron ore, does not arise. Iron ore producing companies normally plan their production activities and levels depending on mine capacities, market conditions and need for conservation. As per available information production of iron ore in the country has been continuously increasing in the past several years.

(c) The production of iron ore in the country during each of the last three years is as below;

(Quantity: in million tonnes)

(d)&(e): No, Sir. In a liberalized and deregulated environment, targets for production of iron ore are determined by the individual mining companies/steel plants operating captive mines, keeping in view the market demand and other related factors.

(f)&(g): The export policy for raw materials like iron ore, chrome ore and manganese ore has already been formulated and notified by Director General of Foreign Trade (DGFT) under the Foreign Trade Policy, which is valid from 1.4.2004 to 31.3.2009. As per the existing policy iron ore with ferrous content up to 64 per cent is free for exports, while exports of high-grade iron ore (64 per cent Fe and above) are canalized through Metal and Minerals Trading Corporation Limited. In relaxation of this policy, mine-owners, who have surplus iron ore after meeting the demand of domestic industry and MMTC, are also allowed to export high-grade iron ore under licence.

As regards steel prices, while the prices are determined by the interplay of market forces, Government has been taking various steps to ensure both adequate availability and stability in prices of steel in the domestic market. The measures taken by the Government inter-alia include considerable reduction in import duties on steel as well as steel making inputs, reduction in DEPB rates on steel items and fixation of value caps for all items of iron and steel and ferro alloys, increasing allocation of iron and steel materials for the SSI sector and advising steel PSUs to export only after fulfilling the domestic requirement.

QUANTITY COST OF COAL IMPORTED BY SAIL

(a) the total quantity of coal imported by the Steel Authority of India during the last three years and current fiscal alongwith the cost thereof, year-wise;

(b) whether any enquiry has been made into imports during the current fiscal;

(c) if so, the findings of the enquiry; and

(d) the action taken by the Government thereon?

(a) The total quantity of coking coal imported by Steel Authority of India Limited (SAIL) during the last three years (April-March) and the current fiscal along with the cost thereof is given below year-wise :-

(b) No enquiry has been made into imports during the current fiscal.

(c)&(d): Do not arise in view of (b) above.

HIGHER STEEL PRICE IN JHARKHAND AND BIHAR

(a) the reasons for prices of steel produced in Bokaro Steel Plant ruling high in the States of Jharkhand and Bihar in comparison to other States?

(a) Prices in different markets in the country are determined by the free interplay of market forces. Steel Authority of India Limited (SAIL) follows a well established system of destination pricing wherein the prices of various steel products in individual markets conform to the prevailing market prices in these markets. The prices of these products for a consumer at a given place are determined after adjusting the freight element through a system of rebates/discounts which match the freight component. In this process, it is possible that the same grades of steel are more expensive in markets close to the production facilities.

STEEL CONSUMER COUNCIL MEETING

(a) whether in the 18th National Steel Consumers` Council meeting held in June 2004, it was suggested that a National Steel Regulatory Body should be formed for keeping a check on steel prices;

(b) if so, whether the Government has since examined the proposal; and

(c) if so, the response of the Government thereto?

(a)&(b): Yes, Sir. The need for setting up a Regulatory Body for keeping the steel prices in check was discussed in the 18th National Steel Consumers` Council meeting held in June 2004. However, no concrete proposals were received by the Government.

(c) Prices have generally remained stable for the last few months, and no need has been felt for any intervention by the Government. The price situation is being carefully monitored and appropriate steps will be taken in case a need arises for exercising some measure of regulation in the future.

ACQUISITION OF EQUITY STAKES BY SAIL

(a) whether Steel Authority of India Limited (SAIL) is planning to acquire equity stakes in overseas mines;

(b) if so, the details thereof;

(c) the number of companies under consideration of the Government proposed to be authorised to acquire equity;

(d) the time by which a final decision is likely to be taken in this regard; and

(e) the benefit likely to be derived by SAIL after acquiring equity in foreign companies?

(a)&(b): The SAIL Board considered the proposal to invest in Tahmoor Coal Mine Pty. Ltd. of Austral Coal Limited, Australia. The proposal was not found to be financially viable and, therefore, was dropped. Another proposal for strategic partnership with BHP Billiton, Australia for development of coal reserves in Australia and iron ore reserves in India was considered by SAIL Board and approved.

(c) There is no company under consideration of the Government proposed to be authorised to acquire equity.

(d) Does not arise in view of (c) above.

(e) Availability of good quality good coal is an important requirement for both quality of hot metal and productivity of Blast Furnaces. Due to the inadequate availability of high grade low ash coking coal from domestic sources, SAIL is largely dependent on meeting its requirement of coking coal through imports. Acquiring equity stakes in overseas coking coal mines would help in ensuring security of supplies for SAIL for this critical raw material.

ASSISTANCE FROM IRAN FOR KIOCL PROJECT

(a) whether the Government has received assistance from the Government of Iran for implementation of Kudremukh Iron Ore Project;

(b) if so, the details of the agreement signed with Government of Iran in this regard;

(c) the details of the terms and conditions of the assistance;

(d) the quantum and cost of Iron Ore exported to Iran from the Kudremukh Iron Ore Project since its operation till date and foreign exchange earned therefrom; and

(e) the details of the debts due to Iran as on date and the time by when it will be repaid?

(a) Yes, Sir. The Imperial Government of Iran had agreed to provide necessary credit for implementation of Kudremukh Iron Ore Project;

(b)&(c): A Memorandum of Understanding was entered into on 2nd May, 1974 between the Imperial Government of Iran and the Government of India.

(i) As per the MoU dated 2.5.1974, the Government of Iran was to provide necessary credit for the implementation of the Kudremukh Iron Ore Project for production and delivery of Iron ore concentrate to the National Iranian Steel Industries Company, Tehran.

(ii) Based on the provisions of the above MoU, a Sale and Purchase Contract was concluded on 4-11-1975 for production and supply of 150 million tonnes of Iron Ore Concentrate over a period of 20 years @ 7.5 million tonnes per annum. Subsequently, on 3rd August, 1989, an MoU was entered into between the Government of India and the Government of Iran which provided for revised quantity schedule of supply, pricing formula etc. As per this MoU, the quantum of Iron Ore Concentrate to be supplied to Iran was brought down to 25 million tonnes, to be supplied from the year 1989-90 onwards, over a period of 15 years.

(iii) The Imperial Government of Iran agreed to sanction loan not exceeding US $ 630 million to finance implementation of the Kudremukh project. However, due to the subsequent political developments and upheavals in Iran, they paid US $ 255.175 million only. The Kudremukh Project was completed with the balance funds made available by the Government of India.

(d) Shipment of Iron ore concentrate to Iran commenced on 31-1-1990 and upto 30th June, 2004, a total quantity of 13.372 million tonnes has been shipped, the value of which is Rs 1008.70 crores; and the foreign exchange earned on this account is US $ 280.263 million.

(e) There is no outstanding debt due to Iran as on date.

STEEL PRODUCTION

(a) the year-wise details of the production of steel in the country during the last three years;

(b) whether any target has been fixed for production of steel during the current year;

(c) if so, the details thereof;

(d) whether the Government has achieved the target;

(e) if so, the details thereof; and

(f) if not, the reasons therefor?

(a) The production of Finished (Carbon) Steel in the country during the last three years is given below:

(Quantity: In million tonnes)

(b) In a liberalized and deregulated environment, targets for production of steel are determined by the individual steel plants, keeping in view the market demand and other related factors. Based on the demand and other market conditions the Government only makes an assessment of the likely production level.

(c)to(f): Do not arise in view of (b) above.

NEW STEEL POLICY

(a) whether it is a fact that a new Steel Policy has been formulated and waiting for the Government`s approval; and

(b) if so, the salient features of the proposed new Steel Policy?

(a) Yes, Sir.

(b) The following are some of the salient features of the draft National Steel Policy (NSP):

# The NSP sets out a broad roadmap for the Indian Steel Industry in its journey towards reform, restructuring and globalisation.

# The long-term goal of the NSP is that India should have a modern and efficient steel industry of world standards, catering to diversified steel demand. The focus of the policy is to achieve global competitiveness not only in terms of cost, quality and product-mix but also in terms of global benchmarks of efficiency and productivity.

# In order to achieve the goal of 110 million tonnes of steel production by 2019-20, the NSP seeks to remove the supply-side constraints to the growth of this industry in an open, globally integrated and competitive environment.

# The NSP seeks to adopt a multi-pronged strategy to move towards the long-term policy goal. On the demand side, the strategy would be to create incremental demand through promotional efforts, creation of awareness and strengthening the delivery chain, particularly in rural areas. On the supply side, the strategy would be to facilitate creation of additional capacity, remove procedural and policy bottlenecks in the availability of inputs such as iron ore and coal, make higher investments in R&D and encourage the creation of infrastructure such as roads, railways, and ports.

# The NSP acknowledges the low per capita consumption of steel in the country, especially in the rural areas and the need to boost steel consumption to improve quality of life and help in meeting the growing aspirations of masses.

# In order to achieve the strategic goal of 110 mt of steel production by 2019-20, the industry would need additional capital. In addition, funds would be required for technological upgrade of existing facilities. In order to mobilize such vast resources NSP seeks to encourage foreign direct investment. In addition the policy also seeks to make the fiscal incentives, available to infrastructure projects, accessible to the steel industry.

# The NSP seeks to support developing of risk-hedging instruments like futures and derivatives to contain price volatility in the steel market.

# The NSP seeks to strengthen the existing training and research facilities available to the domestic steel industry so as to provide suitable training programmes especially for the secondary small-scale units and also to collect and analyze data on important parameters of the industry.

# The NSP seeks to mount aggressive R&D efforts to create manufacturing capability for special types of steel, substitute coking coal, use iron ore fines, develop new products suited to rural needs, enhance material and energy efficiency, utilize waste, and arrest environmental degradation.

# The NSP acknowledges the important role played by the secondary steel sector in providing employment, meeting local demand of steel in rural and semi-urban areas, and meeting the country`s demand of some special products and seeks to endeavour to provide the necessary feedstock to these units at reasonable prices from major plants through the existing mechanism of State Small Industries Corporations.

# The NSP recognizes the fact that integration of the Indian steel industry with the global economy requires that the industry should be protected from unfair trade practices, which become common especially during periods of downturn. The NSP therefore, envisages institution of mechanisms for import surveillance, and monitoring export subsidies in other countries.

SEPARATION OF BHILAI STEEL PLANT FROM SAIL

(a) whether the Union Government has received any proposal from the Government of Chhattisgarh to separate the Bhilai Steel Plant from Steel Authority of India Limited;

(b) if so, the decision taken thereon; and

(c) if not, the time by which it is likely to be taken?

(a) Yes, Sir.

(b) The proposal was not found acceptable.

(c) Does not arise in view of (b) above.

MERGER OF IISCO WITH SAIL

(a) whether it is a fact that the proposal for the merger of IISCO with the Steel Authority of India Ltd. (SAIL) has been cleared by his Ministry and waiting for the Cabinet`s approval; and

(b) if so, the details of the proposal and the present stage of the proposal?

(a)&(b): Government has approved the proposal for merger of Indian Iron and Steel Company (IISCO) with Steel Authority of India Limited (SAIL) in June, 2005. SAIL has been permitted to initiate the process of merger after taking due approval of Board of Industrial & Financial Reconstruction (BIFR) as IISCO is a company under BIFR. Accordingly, SAIL & IISCO have initiated the process of merger.

CONSTANT INCREASE IN STEEL STOCK

(a) whether despite the constant increase in the stock of steel an agreement has been made in the Memorandum of Understanding for 2005-06 signed with the different companies for 40 per cent to 20 per cent less release of steel;

(b) if so, whether the SAIL is benefiting private companies by just increasing the stock;

(c) whether at the time of MoU, SAIL invited applications from new traders but refused to sign MoU with any of the new traders; and

(d) if so, the details thereof and the reasons therefor?

(a) Under the Memorandum of Understanding (MoU) Scheme for 2005-06 an attempt was made to increase the customer base by inviting new consumers. In order to make supplies to them, quantitative restrictions were applied to supplies to traders under certain categories of products. Due to non-lifting of materials by direct consumers, the stocks have increased.

(b) On account of declining trend in prices of steel material in the international as well as the domestic market, there has been reduced lifting by consumers leading to increase in stocks in the past few months.

(c)&(d): As indicated above, applications were invited from direct consumers and quantitative restrictions were imposed on supplies to traders in certain categories of products.

LAND ACQUIRED BY POSCO IN ORISSA

(a) the details of the land proposed to be acquired by POSCO for its steel plant in Orissa;

(b) the number of people likely to be displaced thereby;

(c) the rate at which compensation is likely to be paid;

(d) whether acquisition of land by POSCO has been represented against by certain organisations;

(e) if so, the details thereof and reasons there for alongwith the action taken/proposed in this regard;

(f) the approximate quantum of iron ore required by POSCO; and

(g) the status of permission given/proposed to be given to POSCO as regards its level of consumption of iron ore?

(a) The company will require approximately 4000 acres of land for the steel project and associated facilities, including port facilities and a storage yard for coking coal. In addition, the company will also require approximately 2000 acres of land for township development and all related social infrastructure development activities. In addition to the land required for the core activities of the overall project, the company may require additional land pockets for development of the transportation project, the water project and any other project-related infrastructure facilities.

(b) The number of people likely to be displaced will only be known when POSCO files a formal requisition for land.

(c) Compensation will be paid as per the prevailing rehabilitation and re-settlement policy of the Government of Orissa.

(d) Since acquisition has not yet begun, the question of any representation against acquisition does not arise.

(e) Does not arise in view of (d) above.

(f) As per the Memorandum of Understanding signed between the State Government of Orissa and POSCO, the company will need 600 million tonnes of iron ore for their proposed steel plant of 12 million tonnes per annum capacity for a period of 30 years.

(g) The company has not yet filed an application for allotment of iron ore mines.

MINING BY SAIL IN CHIRIYA

(a)to(b) Yes, Sir. There is a proposal to install 1 No.33 MV A Submerged Arc Furnace at Maharashtra Elektrosmelt Limited (MEL) to produce silico manganese.