Amlendu Bhushan Khan / New Delhi : The mining industry has the potential to contribute 6-7% to National GDP but on account of regulatory constraints this contribution has remained limited to close to 1.6%. The situation is most likely to worsen after March 2020 due to uncertainties and downturn in the Indian economy on the one hand, and lack of proper stimulus by the govenrnment on the other. The recent amendment to the MMDR Act has brought in reforms and transparency to the mining industry, but these too fall short of the expectation.
PM Narendra Modi’s 2nd inning is more painful than his first inning for mining industries. It is not enough, they are expecting more pain after March 2020, because lease of minings are going to expire in March month. Due to fear of uncertaintity the mining industries the contribution in the GDP fall from 6 percent to 1.6 precent. However NALCO set to invest over Rs 30,000 crore over the next four years to launch a number of new projects and undertake major expansion programmes, while NMDC to start production from Donimalai mine in Karnataka will resume soon. Fear and pain came out in the Confedration of Indian Industries ( CII ) mining summit here.
India produces as many as 95 minerals, which includes 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals (including building and other materials). The total value of mineral production (excluding atomic minerals) during 2016-17 has been estimated at ` 2,57,882 crore. India is also the third largest coal producer, third largest steel producer, fourth largest Iron-ore producer globally and has the fifth largest Bauxite reserves in the world. With barely 20% of reserves mined, India presents a major opportunity for investors.
National Aluminium Company Ltd (Nalco) is a navratna CPSE under the Ministry of Mines. The company has diversified operations in mining, metal and power. State-owned aluminium company Nalco is looking to revisit its expansion plans, Chairman and Managing Director Sridhar Patra said on Friday. He however refused to give details as the plans have to be put before the board.
Last year, the company had said it was all set to invest over Rs 30,000 crore over the next four years to launch a number of new projects and undertake major expansion programmes.
“We are revisiting (our expansion plans)…Whatever long-term plans you make, you cannot project for 10 or 15 years… because all the factors do not support in that manner,” Patra said on the sidelines of a mining summit organised by CII.
“We have to remodify…Whatever bottlenecks were there, we have removed almost all,” he said.
Last year, the company had said it was all set to invest over Rs 30,000 crore over the next four years to launch a number of new projects and undertake major expansion programmes.
The projects under execution include 1 MTPA capacity 5th stream alumina refinery in the existing complex at Damanjodi at an estimated cost of Rs 5,540 crore which is expected to be completed by April 2021, it had said.
Moreover, around Rs 9,000 crore was being spent for establishment of 6 lakh TPA smelter at the existing complex at Angul in Odisha.
State-owned NMDC said production from its Donimalai mine in Karnataka will resume soon as discussions at the higher level were underway for extension of the mining lease. The Donimalai mine, with a capacity of seven million tonnes per annum (MTPA), was mired in controversy over renewal resulting in the cancellation of lease last year, which subsequently suspended the production from the mine.
On likely extension of Donimalai mine lease, NMDC Director (Production) P K Satpathy said, “High-level discussions are going on. …we are hopeful that in the coming future…one month, 15 days it can happen any time. All ground work has been done and logically we are on the right track. So there is no point for state government to withhold our extension of lease.”
Satpathy was speaking to janjivan.com after the Mining Summit.
Stating that the production from mine would be resumed soon, he said that “discussions (on extension of lease of the block) were going on at the higher level”.
“We have been under severe threat because of this lease renewal. In government companies only there is a provision of lease extension. (with regard to) private companies there is no such provision. No lease will be extended in 2021. They will be auctioned. But in government companies there is provision for extension of lease,” he said.
The public sector mining major, which has been in the business of mining iron ore for over six decades, operates three iron-ore complexes in the country.
While one is located in Karnataka’s Donimalai, two are in Dantewada district of Chhattisgarh – contributing 70 per cent to the company’s total output. SID MKJ
India is richly endowed with Mineral Resources and its Mining history dates back to pre-historic days. India produces as many as 95 minerals, which includes 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals (including building and other materials). The total value of mineral production (excluding atomic minerals) during 2016-17 has been estimated at ` 2,57,882 crore, India is also the third largest coal producer, third largest steel producer, fourth largest Iron-ore producer globally and has the fifth largest Bauxite reserves in the world. With barely 20% of reserves mined, India presents a major opportunity for investors.
The industry has the potential to contribute 6-7% to National GDP but on account of regulatory constraints this contribution has remained limited to close to 2%. The recent amendment to the MMDR Act has brought in reforms and transparency to the mining industry in India. However, for a sustained high growth trajectory, measures to fasten the approval processes, create a conducive fiscal regime, enabling policy framework for promoting exploration etc. are needed.
“It is critical for India to build a globally competitive mining sector,” said Mr Chandrajit Banerjee, Director-General, CII, referring to the CII Research report ‘Towards A Globally Competitive Minerals and Mining Industry’ released today at the CII Mining Summit. “The industry is key to ensuring the country’s energy and raw material security,” he added.
The CII report points out that the mining sector in India is highly under-developed relative to its enormous potential. Not only is the country endowed with vast resources across a range of minerals, it also has the domestic capacity to absorb significantly higher mineral production, as evident from our substantial mineral imports.
The mining sector’s contribution to GDP has declined since 2011-12. The report identifies twelve areas which must be addressed in order to develop and re-energise the Indian mining industry.
Boosting exploration, particularly for non-bulk minerals, by ensuring attractive incentives to explorers is vital. Over the last few years, exploration by private players has come to a near stand-still. Interventions such as introducing a seamless transition from exploration to mining license, permitting sale of license at any stage and allowing private companies to proactively approach the government for exploration areas will help overturn this trend.
Easing, expediting and simplifying the process of obtaining environmental and forest clearances is another key lever of driving competitiveness. While the report fully appreciates the need to ensure that all companies undertake sustainable mining, it recommends that the process be made significantly more efficient.
Streamlining the auction process will also lead to greater efficiency and more effective outcomes. The report suggests shifting from a two-stage ascending forward online electronic auction to a single-stage sealed bid, to dampen aggressive bidding. Further, the process must not be annulled, or multiple rounds introduced, if the number of bidders is less than three.
Mining companies in India are subject to much higher financial levies than other mining geographies, as a result of high royalty rates, multiplicity of levies and double taxation. Royalty rates should be reduced in line with international benchmarks. Accordingly, implementation of the Royalties Study Group must be fast-tracked.
A short-term albeit important issue the government needs to address immediately is in relation to mining leases expiring in 2020. In order to minimise disruption in supply, CII suggests that seamless transfer of clearances be mandated, provided operating parameters remain the same.
The report recognises that the mining industry has been viewed as causing environmental damage and being responsible for displacing local communities. To overcome this negative perception, the report suggests that industry voluntarily adopt responsible mining practises to build trust with stakeholders.
Finally, the report emphasises that the government must ensure that policy interventions should take cognizance of emerging global trends in mining, such as smart mines, deep sea mining and the changing composition of the mining workforce.
Mining is a critical and fundamental sector, particularly as India races to achieve the target of a USD 5 trillion economy. The government must expeditiously implement the interventions suggested in the CII report to realise the industry’s full potential.
