India mining industry is age old and can be traced back to its earliest civilisations, the pre-Harappan period, from 4000 to 2500 BC. Theeconomic growth of a nation largely rests on the mineral deposits that exist. Mining is a major economic activity in India significantly providing lakh of job to its ever growing population.During the year 2014-15, there were 3025 operational mines in India.India is the third-largest producer of coal with a production of565.6 million tonne (MT) in FY14 with 302 billion tonne of coalreserves. India has got the 6th largest iron ore reserve and 8thlargest bauxite ore reserve in the world. India is the 4th largestiron ore producer and 5th largest bauxite ore producer in the world.There is lot of scope for new mining opportunities in coal, iron ore and bauxite. SandeepSharma takes a look at the mining sector....
The index of mineral production of mining and quarrying sector for the month of July (newSeries 2004-05=100) 2016 at 118.7, was 0.8% higher as compared toJuly 2015. The cumulative growth for the period April- July 2016-17over the corresponding period of previous year stands at (+) 2.0%.
The total value of mineral production (excluding atomic & minor minerals) in the country during July 2016 was Rs 17,339 crore. The contribution of Coal was the highest at Rs 6238 crore (36%). Next in the order of importance were: Petroleum (crude) Rs 5,593 crore, Natural gas(utilized) Rs 2,165 crore, Iron ore Rs 1,347 crore, Limestone Rs 554crore and Lignite Rs 535 crore. These six minerals together contributed about 95% of the total value of mineral production in July 2016.
Production level of important minerals in July 2016 were: Coal 442 lakh tonne, Lignite 30lakh tonne, Natural gas (utilized) 2618 million cu. m., Petroleum(crude) 31 lakh tonne, Bauxite 1972 thousand tonne, Chromite 177thousand tonne, Copper conc. 11 thousand tonne, Gold 172 kg., Ironore 115 lakh tonnes, Lead conc. 22 thousand tonne, Manganese ore 150thousand tonne, Zinc conc. 89 thousand tonne, Apatite & Phosphorite 54 thousand tonnes, Limestone 253 lakh tonnes, Magnesite17 thousand tonne and Diamond 3100 carat.
The production ofimportant minerals showing positive growth during July 2016 over July2015 include ‘Gold’ (19.4%), ‘Coal’ (4.7%), ‘Natural gas(utilized)’ (4.4%), ‘Lead conc. (3.0%), ‘Chromite’ (2.1%),‘Manganese ore ’(1.2%), ‘Iron ore’ (0.7%) and ‘Limestone’(0.3%) . The production of other important minerals showing negativegrowth are: ‘Apatite & Phosphorite’ [(-) 72.6%], ‘Zincconc.’ [(-) 31.4%], ‘Magnesite’ [(-) 31.3%], ‘Bauxite’ [(-)31.0%], ‘Copper conc.’ [(-) 16.5%], ‘Diamond’ [(-) 15.3%],‘Petroleum (crude)’ [(-) 1.8%] and ‘Lignite’ [(-) 1.6%].
ATTRACTING PRIVATE SECTOR PARTICIPATION
A comprehensive National Mineral Policy was announced in March 1993 that encouraged private sector investment in exploration in mining. Amendments were carried out in 1994 and 1999 in order to simplify the procedure for grant of mineral concession so as to attract large investment through private sector participation, including foreign direct investment(FDI), and thereby, induct latest technology into the mining sector.Despite the above initiatives, prospecting and mining activity remained at undesired levels. In February, 2006, 100 percent FDI through automatic route was allowed in mining sector. However,liberalization of investment regime and amendments in regulatory framework again did not attract much of private investment as desired and challenges remained to be addressed.
Based on recommendations of the High Level Committee (HLC) constituted by the Planning Commission, a revised National Mineral Policy was announced in 2008. The key features of this policy are: (a) grant of mineral concession of all types, such as RP, PL and ML, would be transparent and seamless and security of tenure be guaranteed to the concessionaries, (b) prospecting and mining is to be recognized as independent activities with transferability of concessions playing a key role in mineral sector development, (c) while government agencies would continue to perform the tasks assigned to them for exploration and survey, the private sector would be the main source of investment in reconnaissance and prospecting and government agencies would expend public fund primarily in areas where private sector investments are not forthcoming, (d) an open sky policy of non-exclusive reconnaissance work would be adopted to expedite completion of reconnaissance work for the entire country as early as possible.
NATIONAL MINERAL EXPLORATION POLICY (NMEP)
The limited success of earlier policy measures, as well as the requirements of the new emerging imperatives, has led to the amendments made to the Mines and Minerals Development and Regulation (MMDR)Act 1957 through the Amendment Act of 2015. The most important feature of this amendment is the grant of mining leases and composite licenses (prospecting licence-cum-mining lease) only through an auction process. The Mineral (Evidence and Mineral Contents)Rules 2015 specifies that for auction of mining lease, at least general exploration (G2) is required to be completed and for auction of composite licence, at least preliminary exploration (G3) to be completed. The amended Act also removed the earlier provision of RP and provided for non-exclusive reconnaissance permit (NERP). However,the holder of such NERP shall not be entitled to make any claim for grant of PL-cum-ML or ML. The amended Act also removed the restriction on lease transferability and allowed the transfer of mineral concession held by lease holders to any person eligible to hold such lease.
The National Mineral Exploration Policy (NMEP) was launched in July 2016 aiming to accelerate the exploration activity in the country through enhanced participation of the private sector. The policy addresses the need for comprehensive mineral exploration of the country to uncover its full mineral potential so as to put the nation's mineral resources(non-fuel and non-coal) to best use and thereby maximize sectoral contribution to the Indian economy.
The policy,inter-alia, proposes that:
The Government will create baseline geoscientific data as a public good and will make available pre-competitive baseline geoscientific data of the highest standards free of charge in public domain.
The Government will carry out aero-geophysical survey of the country in a mission mode initially in the potential areas of around 8 lakh sq km and subsequently in the rest of the areas.
A National Geoscientific Data Repository (NGDR) will be set up to collate all baseline and mineral exploration information generated by various central and state government agencies and also mineral concession holders and maintain these on a geospatial database.
The Government will establish a National Centre for Mineral Targeting (NCMT) incollaboration with geoscientific organisations, academia and industry to target concealed and deep-seated mineral deposits.
The Government will carry out auctioning of identified exploration blocks for exploration by private sector on a suitable revenue sharing basis incase their exploration leads to auctionable resources. In case noauctionable resources are discovered, exploration expenditure will be reimbursed on normative cost basis.
INVESTMENT ENVISAGED TO IMPLEMENT NMEP
The amount estimated by the Government of India for implementing National Mineral Exploration Policy (NMEP) in the next five years is about Rs 2,116crore. Funding is planned from the regular annual budget of the Geological Survey of India, an attached office of Ministry of Mines,and additional grants including funds from National Mineral Exploration Trust and budgetary support by the Central Government.
A National Geo-scientific Data Repository is proposed to be created to collate,process and interpret all baseline and mineral exploration information generated by various central and state government agencies, and mineral concession holders.
Geological Survey of India, Ministry of Mines, has identified 100 potential blocks for auctioning in the first phase. The mineral-wise breakup of the identified blocks is given below:
In July, 2016, the Minister of State (IC) in the Ministry of Mines, Power, Coal and New& Renewable Energy Piyush Goyal in a reply to a question in RajyaSabha mentioned that so far 43 major mineral blocks have been notified across eight States for auction as part of first phase. The mineral blocks of iron ore, limestone, bauxite, tungsten and gold,have been put up on auction by the various State Governments.
COAL DISTRIBUTION POLICY AMENDED TO SUPPORT SME
New Coal Distribution Policy (NCDP), 2007 is amended by the Union Government to increase annual cap of coal through State Nominated Agencies from4200 tonne per annum for sale through State Nominated Agencies (SNA)to 10,000 tonne per annum and amended phrase of ‘small and medium sector’, as mentioned in the NCDP to ‘small, medium and others’.The amendment is going to benefit the small, medium and other sectors as they would get adequate quantity of coal at notified price through SNA.
There are sufficient reserves/resources of bauxite to meet the domestic demand. Details of bauxite reserves/resources as on 01.04.2013 in the country and the quantity of bauxite extruded/produced during the year 2013-14 to2015-16 as per Indian Bureau of Mines are given below:
(In 000 tonne)
Production ofbauxite during 2013-14 to 2015-16 (in 000 tonne)
*Figures are provisional
To address the environment concerns in case of mining projects. Central Public Sector Enterprise Coal India Ltd (CIL) and Indian Council of Forestry Research and Education (ICFRE) have recently signed a MoU for effectively monitoring of environment related issues in the coal mining projects. The MoU covers assessment and monitoring of plantation and eco restoration activities, preparation of wild life management plans, preparation of environmental impact assessment and environmental management plans, capacity building for the executives of CIL on environment and forestry issues etc. The MoU aims to also help in improving the rehabilitation and reclamation of the mined out areas. The arrangement can help in meeting environmental compliance for coal mining projects.
The Minister of State (Independent Charge) For Power, Coal, New & Renewable Energy and Mines Piyush Goyal had said in the Rajya Sabha on 8thAugust, 2016 that so far 7 mineral blocks have been auctioned in thecountry. Out of this, 6 blocks were auctioned during the year 2015-16with estimated additional revenue to the respective state governments of Rs. 13032 crores during the lease period of the mines. One block has been auctioned in 2016-17 with estimated additional revenue of Rs106 crore during the lease period. No mines were auctioned during2014-15. He also said that the respective State Governments have indicated a pipeline of 80 blocks which could be considered for auctioning depending on the status of the preparedness in terms of completion of prescribed level of exploration and preparation of geological reports and establishment of mineral contents as per Minerals (Evidence of Mineral Contents) Rules, 2015.
According to are port by Ernst & Young (EY) titled 'Indian Minerals Exploration— Play to Win', the new National Mineral Exploration Policy (NMEP)can provide an impetus to exploration and generate a continuous flow of mineral blocks to be auctioned. Anjani K Agrawal Partner and National Mining and Metals Leader Ernst & Young LLP, India had quoted in the report, ‘The Indian minerals exploration sector is on the cusp of transformational change driven by a new policy framework.To succeed, the government will be a collaborative investor-partner playing diverse critical roles. Certain aspects will need constantre-evaluation from a risk-reward
perspective to make the sector attractive for the explorers to engage, perform and succeed in harnessing India’s potential.’
The report clearly points to the huge mining potential in India, The report says, India is yet to be fully explored, assessed and exploited, with only around10% of the potentially resource-bearing area having been explored,constrained by minimal exploration budgets over the years. The number of participants in the Indian exploration sector can indeed be broad based from the current 8 (compared to 400 or more for Canada and Australia each). Success in mineral exploration is a necessity to keep the flow of auction able mining blocks into the market and meet India’s internal demand.
NMEP promises to revolutionise the mining sector in India and pave way for win-winproposition for both the Government and the private sector.