The mining activity refers to the extraction of valuable minerals or other geological materials from the Earth, usually from an ore body, lode, vein, seam, reef or placer deposit. The Mining sector share of India’s GDP fell from 1.93% in FY13 to 1.53% in FY18, when India’s GDP grew from five per cent to seven per cent. According to Trading Economics website, the GDP from Mining in India increased to Rs 1139.86 billion in the first quarter of 2019 from Rs. 875.89 billion in the fourth quarter of 2018. The GDP from Mining in India averaged Rs. 779.66 billion from 2011 until 2019, reaching an all time high of Rs.1139.86 billion in the first quarter of 2019 and a record low of Rs.556.18 billion in the third quarter of 2012. According to Invest India, the county is home to 1,531 operating mines and produces 95 minerals – 4 fuel-related minerals, 10 metallic minerals, 23 non-metallic minerals, 3 atomic minerals and 55 minor minerals. During 2018-19, the Mining and Quarrying industry accounted for about 2.4 % of the GVA at current prices. Sandeep Sharma takes a look at the Mining sector in India.
MINERAL & MINING SECTOR STRUCTURE
The Ministry of Mines (MoM), Government of India is responsible for the entire minerals and mining sector in the country that includes legislation, administration, policy formulation etc. in respect of all mines and minerals other than coal and lignite, natural gas and petroleum, but including offshore minerals. In the case of atomic minerals and coal activities of the Ministry are limited to regional exploration. In India, the minerals are classified as minor minerals and major minerals. The power to frame policy and legislation relating to minor minerals is entirely delegated to the State Governments while policy and legislation relating to the major minerals is dealt by the MoM.
The Ministry is responsible for the administration of the Mines and Minerals (Development and Regulation) Act, 1957 and rules made there under in respect of all mines and minerals other than coal, natural gas and petroleum. MoM throughits attached office, Geological Survey of India (GSI), facilitates exploration, geological mapping and mineral resource assessment in the country. Indian Bureau of Mines (IBM), a subordinate office of the MoM is mainly responsible for regulation of mining in the country. The Ministry also administers the Offshore Areas Mineral (Development and Regulation) Act, 2002 and rules made there under.
Mineral concessions in India are granted to Indian nationals or entities incorporated in India only.
FACTS AND FIGURES
The value of mineral production (excluding fuel minerals, atomic minerals and minor minerals) at Rs.7,010 crore in November 2018 increased by 7.9% as against Rs.6,494 crore in the previous month. The value at Rs.46,418 crore during April - November 2018 increased by 35.1% as compared to the corresponding period of the previous year.Of the total value of mineral production in November 2018 iron ore accounted for Rs.4,764 crore or 68%, limestone Rs.684 crore or 9.8%, zinc conc. Rs.483 crore or 6.9%, chromite Rs.226 crore or 3.2%, silver Rs.226 crore or 3.2% and manganese ore Rs.199 crore or 2.8%. These six minerals together contributed 93.9% of the total value of mineral production.
The remaining 6.1% was shared by the rest ofthe minerals.The production levels of principal minerals in November 2018 were: coal 62.9 m.t., lignite 3.4 m.t., natural gas (utilised) 2667 m.c.m., petroleum (crude) 2.8 m.t., bauxite 2095 th.t. (thousand tonnes), chromite 239 th.t., copper conc.12 th.t, gold 121 kg., iron ore 19.2 m.t., lead concentrates 29 th.t., zinc concentrates 129 th.t., manganese ore 246 th.t., phosphorite 93 th.t. and limestone 302 mt.
As regards the state-wise value of mineral production in November 2018, the value of production from Odisha was at Rs.3137 crore or 44.8% of the total value of mineral production followed by Chhattisgarh Rs.1215 crore or 17.3%, Rajasthan Rs.1080 crore or 15.4%, Karnataka Rs.712 crore or 10.2%, Jharkhand Rs.233 crore or 3.3%, Madhya Pradesh Rs.202 crore or 2.9%, Maharashtra Rs.118 crore or 1.7%, Andhra Pradesh Rs.96 crore or 1.4%, Gujarat Rs.57 crore or 0.8%, Telangana Rs.48 crore or 0.7%, Tamil Nadu Rs. 44 crore or 0.6%, Meghalaya Rs.25 crore or 0.4%, Himachal Pradesh Rs.24 crore or 0.3% and Assam Rs.5 crore or 0.1%. These principal states together contributed 99.9% of the total value of mineral production in November 2018. The remaining value of Rs.14 crore or 0.1% was contributed by the remaining mineral producing states.The Mining industry in India is a major economic activity which contributes significantly to the economic growth of the country, and provides significant employment. India is the second largest crude steel producer, fourth largest coal producer and iron ore producer in the world. FDI equity inflows into the Metallurgical and mining (April 2000-March 2019) accounted for $13.830 bn.
As per the Economic Survey 2018-19, almost 60 per cent of India’s installed capacity is in thermal power out of which the main component is the coal based thermal power plants. Despite, the increased global focus towards harnessing the renewal sources of energy, coal remains the largest source of electricity generation mix globally, with 38 per cent market share in 2018 (IEA, 2019). The coal mining activity in India is likely to rise further as the electricity requirement in the country goes up. The growth of power and cement sector owing to rapid urbanisation and industrialisation, are likely to drive mining sector growth. The increase in demand for iron and steel has the potential to affect the mining sector positively. The Government of India is keen to double the steel production capacity to 300 million tonne by 2030-31, translating into increased opportunities for the mining sector.
NATIONAL MINERAL POLICY 2019
The National Mineral Policy, 2019 (NMP 2019) was approved by Union Cabinet in February 2019.
The aim of the policy is to have a more effective, meaningful and implementable policy that brings in further transparency, better regulation and enforcement, balanced social and economic growth as well as sustainable mining practices. It will lead to sustainable mining sector development in future while addressing the issues of project affected persons especially those residing in tribal areas.
The NMP 2019 includes provisions which will give boost to mining sector such as: 1) Introduction of Right of First Refusal for RP/PL holders. 2) Encouraging the private sector to take up exploration. 3) Auctioning in virgin areas for composite RP cum PL cum ML on revenue share basis. 4) Encouragement of merger and acquisition of mining entities and transfer of mining leases and creation of dedicated mineral corridors to boost private sector mining areas. 5) The 2019 Policy proposes to grant status of industry to mining activity to boost financing of mining for private sector and for acquisitions of mineral assets in other countries by private sector. 6) It also mentions that Long term import export policy for mineral will help private sector in better planning and stability in business. 7) The Policy also mentions rationalize reserved areas given to PSUs which have not been used and to put these areas to auction, which will give more opportunity to private sector for participation. 8) The Policy also mentions to make efforts to harmonize taxes, levies & royalty with world benchmarks to help private sector.
CURBING ILLEGAL MINING
The Ministry of Mines & Indian Bureau of Mines (IBM) have developed the Mining Surveillance System (MSS), with assistance from Bhaskaracharya Institute for space applications and Geo-informatics (BISAG), Gandhinagar and Ministry of Electronics and Information Technology (MEITY). MSS is a satellite-based monitoring system which aims to establish a regime of responsive mineral administration by curbing instances of illegal mining activity through automatic remote sensing detection technology.STRATEGIC AND CRITICAL MINERALS The Government of India has recently decided to set up a joint venture company namely Khanij Bidesh India Ltd. (KABIL), with the participation of three Central Public Sector Enterprises namely, National Aluminium Company Ltd.(NALCO), Hindustan Copper Ltd (HCL) and Mineral Exploration Company Ltd (MECL). The objective of constituting KABIL is to ensure a consistent supply of critical and strategic minerals to Indian domestic market. While KABIL would ensure mineral security of the Nation, it would also help in realizing the overall objective of import substitution.
The KABIL would carry out identification, acquisition, exploration, development, miningand processing of strategic minerals overseas for commercial use and meeting country’s requirement of these minerals. The sourcing of these minerals or metals is to done by creating trading opportunities, G2G collaborations with the producing countries or strategic acquisitions or investments in the exploration and mining assets of these minerals in the source countries. The new company will help in building partnerships with other mineral rich countries like Australia and those in Africa and South America, where Indian expertise in exploration and mineral processing will be mutually beneficial bringing about new economic opportunities.
The official Wholesale Price Index for ‘All Commodities’ (Base : 2011-12=100) for the month of July, 2019 declined by 0.2% to 121.2 (provisional) from 121.5 (provisional) for the previous month.The index for ‘Minerals’ group declined by 2.9% to 153.4 (provisional) from 158 (provisional) for the previous month due to lower price of copper concentrate (6%), iron ore and chromite (2% each) and lead concentrate and manganese ore (1% each).
However, the price of bauxite (3%) and limestone (1%) moved up.
India’s mineral sector is heavily import dependent. The value of domestic production of all major minerals (excluding coal, lignite and minor minerals) was Rs.58,638 crore in 2017-18, while the import value of vital minerals/metals, was marked at a whooping Rs.4.34 trillion. Due to import superceeding domestic production, the country has to face the rising current account deficit.
India boasts large reserves of Iron ore, Bauxite, Chromium, Manganese ore, Baryte, Rare earth and Mineral salts. According to Invest India, the country 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). India is the 2nd largest crude steel producer in the world, generating an output of 106.5 MT in 2018, a growth of 3.7% Y-o-Y. Indian steel demand is set to grow by 7.1% in 2019 whileglobally, steel demand has been projected to grow by 1.3%. The Metals and Mining sector in India is expected to generate increased output trying to match the rising demand in the next few years, owing to programmes and reforms such as Make in India Campaign, Smart Cities, Rural Electrification and increased focus on building renewable energy projects. The programmes like ‘Make in India’ very much depends upon the corresponding growth in the mining sector. The industry body Federation of Indian Chambers of Commerce & Industry (FICCI) is of the view, that if India aims to achieve double-digit GDP growth, the mining sector output needs to double.
According to FICCI, despite the 100 per cent foreign direct investment (FDI) allowed for mining in India, the sector has not witnessed big ticket investments by global mining firms. FICCI also recommended bringing down the levy of higher taxes to protect and boost the mining industry.
To boost mining sector growth, the union cabinet has approved 100% foreign direct investment under the automatic route in mining, processing and sale. 100% FDI for coal mining and all related processing activities will be allowed under the automatic route. This would pave way for private sector companies both domestic and foreign to invest in coal mining activities in a big way. The companies like public sector mining major NMDC are looking forward to augment their production capacity of iron ore to 67 mtpa, from 43 mtpa now. The mining major has decided to form the Special Purpose Vehicles (SPVs) with the governments of Jharkhand and Karnataka to set up steel factories. The company in JV with CMDC is planning to develop 15 mtpa in mines. The world’s largest zinc producer and mining major Vedanta had already spent around `10,000 crore in FY19 on capital expenditure programmes. The coal miner Singareni Collieries Company Ltd (SCCL) is planning a capex of Rs 10,000 crore to be invested over the next five years. Coal India plans capex of `10,000 crore in FY20 targeting 8% growth in production. More such investments are in the pipeline, which are likely to drive the growth of mining & mineral sector in India.