A leading industry lobby has urged the government to review the iron ore and coal mining policy, with domestic demand speedily outstripping availability even as exports are being encouraged.

Demand for coking coal is expected to go up from 30 million tonnes to 80 million tonnes by 2020, the Associated Chambers of Commerce and Industry of India (Assocham) said in its 'Policy Prescription for Mining Sector' released Sunday.

The paper has pointed out that India currently produces around 120 million tonnes of iron ore, of which more than 50 percent of good quality ore is exported.

"As a result, the domestic needs are never met which often lead to escalation in prices of products like steel," said Assocham president Mahendra K. Sanghi while releasing the report.

India has only 13-14 million tonnes of iron ore reserves as compared to around 50 million tonnes in Australia, Brazil and Russia. The proven reserves of prime coking coal in the country are only 4.6 million tonnes, which translate to only five percent of coal reserves.

The industry lobby has suggested that instead of exports, the mining companies should be provided incentives to make ore available in the country to meet the domestic demand.

The chamber has urged that domestic producers should also be encouraged to explore for good quality iron ore and coking coal within the country so that the steel prices do not firm up as iron ore and coking coal are basic inputs for producing good quality steel.

"Instead of laying greater focus on iron ore exports, the attention of the policy makers should be to motivate the domestic players in the mining sector to explore iron ore and coal deposits abroad," said Sanghi.

The chamber in its paper has suggested "a review of existing national policy on mining to put in place a fresh policy framework for meeting the 200 million tonnes demand of iron ore projected for 2020 as against the current production of 120 million tonnes, of which 50 percent is exported".

The industry lobby favours long-term exports of iron ore to be limited to five-year contracts, which should be reviewed from time to time.

The paper points out that there has been no major discovery of iron ore deposits for a long time.

With good quality ore being exported, domestic industries do not have access to adequate quantity of good quality iron ore. In turn, Indian companies have to import iron ore at high prices. Compared to March 2003, the iron ore prices this year have gone up 100 percent.

The National Mineral Development Corp, India's largest miner and iron ore supplier, has also hiked ore prices by 50 percent to Rs.1,430 a tonne from Rs.960 a tonne to realign its prices with the benchmark international prices which were recently increased by 71.5 percent.