MINING

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SUMMARY
  • The Mining industry in India is one of the core industries of the economy. It provides basic raw materials to many important industries.
  • The Mining industry is characterized by a large number of small operational mines.1
  • India is endowed with huge resources of many metallic and non-metallic minerals.2 India produces 95 minerals, which includes 4 fuels, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals (including building and other materials).3
  • The number of mines with reported mineral production (excluding atomic, fuel and minor minerals) in India stood at 1531 in 2017-18 as compared to 1508 in 2016-17.4
  • Based on the geological mapping of the country, an area of 571,000 sq. km, out of a total of 3.1 mn sq. km. has been demarcated as Obvious Geological Potential (OGP) area, where the geological potential for the occurrence of mineral deposits is higher.5
REASONS TO INVEST
  • Mineral concessions (Mining Lease & Prospecting Licence cum Mining Lease) grant to be granted through auctions for the companies interested in mining or for the raw material for their downstream industry.
  • An Inter-Ministerial Group facilitator constituted for expediting the clearances and approvals process.
  • Exploration companies can venture into the revenue share model, being formulated for the exploration of blocks identified by the Geological Survey of India. This has been enabled by the National Mineral Exploration policy, 2016 announced in July 2016. Around 100 blocks have already been identified by GSI for auction.
  • India has vast mineral potential with mining leases granted for longer and stable tenure of 50 years.
  • The demand for various metals and minerals will grow substantially over the next 15 years.
  • India’s strategic location enables convenient exports.
STATISTICS
  • The GVA accrued from the mining and quarrying industry at 2011-12 prices for the first quarter of 2017-18 is estimated to be US$ 12.3 bn.6
  • The mining and quarrying industry’s contribution (at current prices) to GVA accounted for about 2.3% for the first quarter of the year 2017.18.7
  • Up till December 2017, 33 mineral blocks have been successfully auctioned, having a total value of estimated resource of US$ 24.2 bn.8
  • The estimate for the total value of mineral production (excluding atomic and fuel minerals) during 2017-18 has been pegged at US$ 16.2 bn9, which depicts an increase of 13% over that of the previous year.
  • India has 1531 mines, which are distributed across the country as follows10
    1. Tamil Nadu – 230
    2. Madhya Pradesh – 197
    3. Gujarat – 191
    4. Karnataka – 142
    5. Odisha – 132
    6. Andhra Pradesh – 129
    7. Chhattisgarh – 112
    8. Goa – 87
    9. Rajasthan – 85
    10. Maharashtra – 75
    11. Jharkhand – 58

These 10 states account for 94% of the total number of mines in the country.

  • Among 175 Mineral Resource Assessment Projects, 29 are on ferrous minerals (iron, manganese and chromite), 42 precious metals and mineral, 72 for non-ferrous and strategic minerals, 32 on industrial and fertilizer minerals.11
GROWTH DRIVERS
  • The rise in infrastructure development and automotive production is driving the growth of the metals and mining industry in India.12
  • The growth in the mining industry in terms of production of minerals has significantly improved in comparison to recent past. It is pertinent to recall that the industry recorded a negative growth of 0.6% for two consecutive years (2011-12 and 2012-13).
  • The mineral production statistics of 2017-18 have shown a mixed trend as compared to that of 2016-17.13 The states that have witnessed an increase in the value of mineral production are:
  1. Karnataka – 30.66%
  2. Chhattisgarh - 29.98%
  3. Rajasthan – 25.61%
  4. Goa – 23.46%
  5. Odisha – 21.98%
  6. Madhya Pradesh – 17.34%
  7. Maharashtra – 2.07%
  8. Jammu and Kashmir – 1.35%
  • The value of metallic minerals increased by 19.03% in 2016-17.14
  • The private sector has grown into a major contributor to mineral production. During 2016-17, (excluding atomic, fuel, and minor minerals), the private sector accounted for 66.84% of mineral production by volume and US$ 4.5 bn by value.15
  • There has been a notable turn around ever since the government has taken initiative for policy reforms.
  • Minerals like manganese, lead, copper, alumina are expected to witness double-digit growth in the years ahead. There is significant scope for new mining capacities in iron ore, bauxite, and coal.
  • India has an advantage in the cost of production and in conversion costs of steel and alumina.
FDI POLICY

FDI up to 100% under the automatic route is allowed in:

  1. Mining and exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals (Development & Regulation) Act, 1957.
  2. Coal and Lignite mining for captive consumption by power projects, iron and steel cement units and other eligible activities permitted under and subject to the provisions of Coal Mines Nationalization Act, 1973.
  3. Setting up coal processing plans like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plans for washing or sizing.

FDI up to 100% under the Government route is allowed in:

  1. Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities.
  2. Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities subject to industry regulations and the Mines and Minerals (Development and Regulation Act 1957).
SECTOR POLICY
  • The Government has amended the Mines and Minerals Development and Regulation Act 1957 (MMDR Act). The amendment removed discretion by instituting auction to be the sole method of grant of major mineral concessions and, thereby bringing in greater transparency. It also provided the much-needed impetus to the mining industry by deemed extension of mining leases. The Salient features of the recent amendments are:
    • Mineral Concessions Grant Through Auctions to bring transparency and remove discretion.
    • District Mineral Foundation (DMF) to address the grievances of the people affected by mining and in turn improve the image of the mining industry.
    • National Mineral Exploration Trust (NMET) for incentivizing regional and detailed exploration to fill the gaps in exploration in the country.
    • Mining Leases for 50 years and even the existing leases deemed extended eliminating any renewals for security of tenure.
    • Stronger penal provisions have been put in place to check illegal mining. A penalty of up to (approximately) US$ 7200 per hectare of the area and jail term of up to 5 years is the probable punishment for illegal mining.16
  • National Mineral Exploration Policy 2016 announced in July 2016. Around 100 blocks have been identified by Geological Survey of India for auctioning on revenue sharing mechanism for regional exploration to encourage private participation in exploration. The bidders would be protected by way of entitlement for a normative cost in the event unsuccessful outcome after exploration. The mechanism is being formulated in consultation with the stakeholders.
FINANCIAL SUPPORT

Key Highlights of Union Budget 2019-20

  • Budgetary allocation towards the Ministry of Mines stands at US$ 214.3 mn.17
  • The budget allocation towards the Indian Bureau of Mines stands at US$ 12.2 mn.18
  • The budget allocation towards the Geological Survey of India stands at US$ 81.1 mn.19
INVESTMENT OPPORTUNITIES

Post Auction Mining Clearances and Approvals Facilitator

Mineral blocks of non-minor minerals are being put up for auctions by the States for Mining or Prospecting cum Mining, depending on their level of exploration. The grant process is to be completely transparent through competitive bidding on an e-auction portal. An Inter-Ministerial Group, Post Auction Mining Clearances and Approvals Facilitator (PAMCAF) has been constituted which will expedite the requisite clearances to enable the early start of mining activity.20

National Mineral Policy 2019

The aim on the National Mineral Policy (NMP) 2019 is to have an effective, meaningful and implementable policy that brings further transparency, better regulation and enforcement, balanced social and economic growth as well as sustainable mining practices. The NMP 2019 focuses on the Government’s Make in India initiative and gender sensitivity in terms of its vision.21 The NMP 2019 aims to attract private investment through incentives while the efforts would be made to maintain a database of mineral resources and tenements under the mining tenement system.

FOREIGN INVESTORS
  • ​BHP Billiton (Australia)
  • Rio Tinto (Australia)
  • De Beers (Anglo American)
  • Australian Indian Resources (Australia)
  • India Resources Limited (Australia)
AGENCIES
KEY ACHIEVEMENTS
  • Up till November 2018, 50 mineral blocks across nine States have been auctioned. The States include Rajasthan, Odisha, Madhya Pradesh, Chhattisgarh, Karnataka, Jharkhand, Andhra Pradesh, Gujarat and Maharashtra. The estimated value of the e-auctioned minerals stands at approximately US$ 31.6 bn.
  • Restrictions on sharing baseline geo-scientific data in public domain have been relaxed by the Ministry of Defence.
SOURCES
  1. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  2. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  3. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  4. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  5. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  6. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  7. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  8. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  9. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  10. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  11. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  12. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  13. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  14. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  15. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf, accessed on 07 June 2019
  16. “Ministry of Law and Justice”, The Mines and Minerals (Development and Regulation) Amendment Act, 2015, https://www.mines.gov.in/writereaddata/UploadFile/The_Mines-and-Minerals_Amendment_Act,2015.pdf, accessed on 07 June 2019
  17. “India Budget”, Ministry of Mines, https://www.indiabudget.gov.in/ub2019-20/eb/sbe65.pdf, accessed on 07 June 2019
  18. “India Budget”, Ministry of Mines, https://www.indiabudget.gov.in/ub2019-20/eb/sbe65.pdf, accessed on 07 June 2019
  19. “India Budget”, Ministry of Mines, https://www.indiabudget.gov.in/ub2019-20/eb/sbe65.pdf, accessed on 07 June 2019
  20. “Mineral Resources Department”, Investment Opportunities, http://chhattisgarhmines.gov.in/en/investment-opportunities, accessed on 07 June 2019
  21. “Ministry of Mines”, National Mineral Policy 2019 approved by Cabinet, http://www.pib.nic.in/Pressreleaseshare.aspx?PRID=1566734, accessed on 07 June 2019
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