Mining

Summary
  • The Mining industry in India is one of the core industries of the economy. It provides basic raw materials to many important industries.
  • India is the world’s second-largest coal producer and being the 5th largest country in terms of coal deposits. It is a net exporter of finished steel and has the potential to become a champion in certain grades of steel.
  • Steel production increased by 2.6 per cent in January 2021 over January 2020.
  • The production of finished steel in the country from April 2020 to January 2020 was recorded at 76.04 MT. The exports between April 2020 and February 2021 stood at 9.4 MT.40
  • Steel Authority of India Limited (SAIL) reported a growth of 7% in its crude steel production during November’20 (1.417 MT) over CPLY (1.328 MT).29
  • 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 is home to 1,531 operating mines and  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 which reported mineral production (excluding atomic, fuel and minor minerals) in India stood at 1405 in 2018-19.4
  • 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 an Obvious Geological Potential (OGP) area, where the geological potential for the occurrence of mineral deposits is higher.5
  •  Steel and Steel Products (Quality Control) Order, 2020.33
  • In 2nd Tranche of auction for commercial coal mining, Ministry is offering 67 mines for sale of coal.
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.
  • With the launch of the National Mineral Policy 2019, India presents a major opportunity for investors.
  • India has large reserves of Iron ore, Bauxite, Chromium, Manganese ore, Baryte, Rare earth and Mineral salts.
  • India has vast mineral potential with mining leases granted for the 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.
  • The Amendments/additions to the Policy for Providing Preference to Domestically Manufactured Iron & Steel Products in Government Procurement is revised 2019. 
  • The total number of steel plants producing crude steel in the country during 2019-20 is 914 and production of finished steel in the country in April-December, 2020 is recorded at 66.56 MT.

 

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Recent Announcements

 

01st April 2021: Vedanta Group plans to establish INR 10,000 cr copper smelter unit in coastal region.

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05th March 2021: Arcelor Mittal Nippon steel and Odisha government for signing of MOU for setting up mega steel plant in Kendrapada.

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03rd March 2021:Ministry of Mines organizes a workshop in Bhopal on mineral exploration initiatives of NMET for the benefit of State Departments Mining & Geology and State Mineral Development Corporations of states of MP, Chhattisgarh, and Maharashtra.

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18th February 2021: Union Minister for Mines and Chief Minister of Odisha jointly inaugurated the production in two new iron ore mines of Odisha namely Jiling-Langlota Iron ore Block and Guali Iron ore Block.

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10th February 2021:‘Specialty Steel’ included under the Production Linked Incentive.

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Statistics
  • The GVA accrued from the mining and quarrying industry in 2018-19 is estimated to USD 3705.64 Bn.6
  • The mining and quarrying industry’s contribution (at current prices) to GVA accounted for about 2.38% for the first quarter of the year 2018-19.7
  • Up till December 2017, 33 mineral blocks have been successfully auctioned, having a total value of estimated resource of USD 24.2 Bn.8
  • The total value of mineral production (excluding atomic and fuel minerals) during 2018-19 has been estimated at USD 16.53 Bn9, which shows an increase of about 10.11% over that of the previous year.
  • India 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 minerals10
  • 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
  • During the current fiscal (April – Nov. 2020-21) export of finished steel from India at 7.70 MT increased by 33.8% while import at 2.70 MT has declined by (-)46.9% over CPLY. India was a net exporter of finished steel during this period with net trade surplus of 5.0 MT.32 
  • The total revenue generated from the auctioned and allotted mines till November 2020 was INR.8,964.75 cr.
  • Ministry of Coal did an amendment in the Constitution of Single Bench Revisional Authorities under Section 30 of Mines and Minerals (Development and Regulation) (MMDR) Act, 1957.36
  • To enhance domestic production, 25% of coal production has been allowed for the sale of coal for newly allocated captive coal blocks.38
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. 
  • The total value of mineral production (excluding atomic & fuel minerals) during 2018-1913 has been estimated at USD 16.53 Bn which shows an increase of about 10.11% over that of the previous year. 
  • The value of metallic minerals increased by 26.86% in 2017-18.14
  • During 2017-18 (excluding atomic, fuel, and minor minerals), the private sector emerged to play a dominant role in mineral production accounting for 67.33% or USD 5.26 Bn crore in the total 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 a significant scope for new mining capacities in iron ore, bauxite, and coal.
  • The production level of important minerals in March 2020 (provisional) were: Coal 958 lakh tonnes, Lignite 42 lakh tonnes, Natural gas (utilized) 2323 million cu. m., Petroleum (crude) 27 lakh tonnes, Bauxite 1634 thousand tonnes, Chromite 582 thousand tonnes, Copper conc. 11 thousand tonnes, Gold 153 kg, Iron ore 204 lakh tonnes, Lead conc. 26 thousand tonnes, Manganese ore 181 thousand tonnes, Zinc conc. 117 thousand tonnes, Apatite & Phosphorite 133 thousand tonnes, Limestone 272 lakh tonnes, Magnesite 8 thousand tonnes and Diamond 3213 carat16
  • India has an advantage in the cost of production and in conversion costs of steel and alumina.
  • India and Japan signed Memorandum of Cooperation in the field of Steel Industry to promote the development of cooperation in the steel sector between two countries through joint activities under the framework of India Japan Steel Dialogue.34 
  • Single Window Clearance Portal for Coal mining. Coal Sector seemed entangled in bureaucracy and lack of transparency amidst many allegations of corruption.35
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.

Commercial mining, with a provision for 100% foreign investment, has also been allowed by the Government:

  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).

The cumulative FDI equity inflow in the Mining Industry is USD 2,897.03 mn during the period April 2000 to December 2020.21  

 

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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) USD 7200 per hectare of the area and jail term of up to 5 years is the probable punishment for illegal mining.17
  • National Mineral Exploration 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.
  • Hon’ble Prime Minister, Shri Narendra Modi has given its approval to introduce the Production-Linked Incentive (PLI) Scheme in Speciality Steel Sector through the Ministry of Steel of with a financial outlay of INR 6322 cr over a five-year period for Enhancing India’s Manufacturing Capabilities and Enhancing Exports – Atmanirbhar Bharat.
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  •  Mission Purvodaya emphasized to harness the untapped potential of the region to fuel the next wave of national growth. The focus was on Eastern India towards self-reliance and contribution in the making of Aatmanirbhar Bharat. India’s annual per capita steel consumption is 74.1 kg and is one-third the global average (224.5kg). 28
  • National Geoscience Data Repository (NGDR)37
    Collation, assimilation, and integration of the data generated from the National Geoscience Data Repository and Geochemical, Geophysical, and Aero Geophysical Mapping Programs to identify more areas for mineral exploration.

 

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Financial Support

Key Highlights of Union Budget 2019-20

  • Budgetary allocation towards the Ministry of Mines stands at USD 117.6 Mn.18

Bills41

  • The Mines and Minerals (Developments and Regulation) Amendment Bill, 2021 proposes to develop the mining sector to its full potential for faster economic growth.
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.19

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.20 

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.

 

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Foreign Investors
  • ​BHP Billiton (Australia)
  • Rio Tinto (Australia)
  • De Beers (Anglo American)
  • Australian Indian Resources (Australia)
  • India Resources Limited (Australia)
Agencies
Key Achievements
  • 19 mining blocks were auctioned in February, 2020. Since the amendment to MMDR Act, 1957 in 2015, a total of 95 mineral blocks across 9 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 USD 31.6 Bn.
  • Restrictions on sharing baseline geo-scientific data in public domain have been relaxed by the Ministry of Defence.
  • During November, SAIL produced 1.351 MT saleable Steel which is best ever showing for the month of November with the production has gone up by 5% over CPLY. 
  • The Company registered the best ever saleable steel Q2 production of 3.752 MT in Q2 FY’21 surpassing the previous best of 3.658 MT achieved during Q2 FY’18. The saleable steel production in Q2 FY’21 grew by 5% over CPLY.23
  • National Mineral Exploration Trust (NMET) has approved 187 exploration projects with total cost of Rs.895.72 crore up to 31st December, 2019. Among this total 69 projects have already been completed and 118 projects are ongoing. 
  • During the month of September 2020, the production from mines under CM (SP) Act, 2015 is 2.345 mn tonne and revenue from mines under CM (SP) Act, 2015 is INR 45.96 CR.22 
  • The 3rd Annual Leadership Summit “Navigating New Challenges” organized by US India Strategic Partnership Forum and delivered the keynote address on the roadmap for India-U.S. Energy Partnership on 02.09.2020. 
  • A total of 406.22 MW of Renewable Energy capacity was added in October, taking the cumulative installed RE capacity to 89.63 GW.25
  • Production of coal during 2019-20: Coal production grew at CAGR 4.6% over FY14-FY20 to 730.873 MT.39 
  • The revenue from mines allocated under CM(SP) Act, 2015 is INR 45.05 cr.
  • The production from mines allocated under CM (SP) Act, 2015 is 2.77 mn tonne.26
  • The world production of Aluminium Metal in Q3 2020 was about 16.23 mn tonnes against world consumption of 15.62 mn tonnes, resulting in a market surplus of 0.61 mn tonnes. 27
  • Steel production has crossed previous year levels in the last three months with 1.9 per cent and 0.4 per cent growth in September and October respectively.30 
  • The estimated value of Mineral production covering metallic-ferrous and industrial minerals, but excluding fuel minerals, minor minerals and atomic minerals, in October 2020, is INR 5,208 cr.31
  • E-auction of 19 coal mines for commercial mining was held successfully during 02.11.2020 to 09.11.2020.31
  • 5th JWG Meeting on coal held on 5th November 2020 between India and Indonesia chaired by AS (Coal).
Sources
  1. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pd
  2. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  3. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  4. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  5. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  6. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  7. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  8. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  9. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  10. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf
  11. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf
  12. “Ministry of Mines”, Annual Report 2017-18, https://mines.gov.in/writereaddata/UploadFile/Mines_AR_2017-18_English.pdf
  13. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  14. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  15. “Ministry of Mines”, Annual Report 2018-19, https://mines.gov.in/writereaddata/UploadFile/English637094270360450099.pdf
  16. "Mineral Production during March 2020 (Provisional)", PIB, https://pib.gov.in/PressReleaseIframePage.aspx PRID=1624315#:~:text=Production%20level%20of%20important%20minerals,582%20thousand%20tonnes%2C%20Copper%20conc.
  17. “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
  18. Summary of Union Budget 2020-21, https://www.pib.gov.in/PressReleseDetail.aspx?PRID=1601475
  19. “Mineral Resources Department”, Investment Opportunities, http://chhattisgarhmines.gov.in/en/investment-opportunities
  20. “Ministry of Mines”, National Mineral Policy 2019 approved by Cabinet, http://www.pib.nic.in/Pressreleaseshare.aspx?PRID=1566734
  21. Factsheet on FDI - April 2000 to December 2020, Department for Promotion of Industry and Internal Trade, https://dipp.gov.in/sites/default/files/FDI%20Factsheet%20December%2020.pdf
  22. “Ministry of Mines”, Monthly report https://coal.nic.in/sites/upload_files/coal/files/coalupload/13102020september.pdf
  23. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1670977
  24. Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/sites/default/files/cabsept20.pdf
  25. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1671487
  26. “Ministry of Coal”, Monthly Report https://coal.nic.in/sites/upload_files/coal/files/coalupload/17112020october.pdf
  27. “Ministry of Mines”, Monthly report, https://mines.gov.in/writereaddata/UploadFile/October%202020%20Monthly%20Summary01122020.pdf
  28. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1673977
  29. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1678327
  30. https://dea.gov.in/sites/default/files/MER_03122020%28F%29.pdf
  31. Monthly Summary, https://mines.gov.in/writereaddata/UploadFile/October%202020%20Monthly%20Summary01122020.pdf
  32. Monthly Summary, https://steel.gov.in/sites/default/files/monthly%20summary%20nov%2C%2020%20-pdf_compressed_0.pdf
  33. http://egazette.nic.in/WriteReadData/2020/223900.pdf
  34. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1685071
  35. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1687683
  36. PIB Release, http://coal.nic.in/sites/default/files/2021-01/document18012021.pdf
  37. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1692109
  38. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1704810
  39. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1706110
  40. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1706560
  41. PIB Release, https://www.pib.gov.in/PressReleasePage.aspx?PRID=1707544

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