Divining intervention

Nearly a fifth of the country’s land is rich in commercially viable mineral deposits, but without proper prospecting policies, mining has not always been scientific. The government is now wooing foreign players into prospecting and mining in India, and the planned LAPL is expected to bring in fresh interest into prospecting. A Shivkamal writes.

BHP Billiton, Rio Tinto, Anglo American, and Xstrata have something in common: They are some of the biggest names in the worldwide mining industry, and they all have a missing link in their businesses—India, which has one of the largest shares of mineral deposits in the world, including coal, iron ore, bauxite and chromite. For the last six decades, the top companies of the world have had minimum presence in India through joint ventures for ore prospecting. Now, the scene is set to change with the Indian government planning to woo major companies for ore prospecting and mining, a big shift in its policy that is being welcomed by the mining industry.

The Mines & Minerals (Development & Regulation) Bill, 2011, is supposed to be the game changer for the Indian mining industry, and is expected to do to the mining industry what the National Telecom Policy, 1994, did to the telecom sector by revolutionising the way people communicated.

There are several objectives of the new Mining Bill of which, attracting large scale investments by global players, generating employment opportunities, and scientific mining with the use of the latest technology are some of the highlights. But the biggest gainer in the process will be the mining sector, which has been stagnant for the last three decades for want of reforms and simplification of rules at all levels. In addition, the mineral-rich states, mining equipment manufacturers, ore prospecting firms and mine owners have a major share to enjoy.

Large area prospecting

Of all the features of the Mining Bill, it is the Large Area Prospecting Licence (LAPL) that has attracted the big mining firms. For, never in the past, has India been so liberal in giving away large areas for prospecting of ore. “Many top mining companies will steadily make an entry into India. Earlier, their attempts to start business in India were stymied by bureaucratic delays and poor processes. Now, the LAPL should set the ball rolling for the big names of the mining industry,” pointed out Ashok G, CEO, SLN Mining Consultants, a leading mining consultancy in Bangalore.

Under LAPL, areas up to 5,000 sq km will be allocated for a six-year period to prospect ore. According to the Indian Bureau of Mines (IBM) data, approximately 5.7 lakh sq km of the total 30 lakh sq km in the country holds potential for large scale deposits of various commercially viable minerals.

State-run companies are sitting on large tracts of land without carrying out ore prospecting for the last two decades, say mining observers. This is primarily because these state-run companies, which are predominant in the Indian mining scene, do not have the necessary technology and processes to prospect ore over such large areas in an accurate manner. Ore prospecting in India is still evolving. Under the given circumstances, top ore prospecting firms could help in mapping the mineral resources of the country accurately.

The Indian mining sector has not yet opened up fully to private investors. In addition, due to lack of technology, the state-run companies do not have the funds or expertise to dig deeper than the top 50 m to detect the wealth of minerals. Such instances have become common in iron ore-rich states, such as Karnataka and Orissa, where private players are competing with state-run com­panies, which have obtained prospecting licences but have not submitted the corresponding reports properly.
“We are facing a huge problem in the Bellary region,” said a senior official in Karnataka Government’s Mines & Geology Department. “There are three companies (names withheld) competing for the same iron ore block in the Ramanadurga Range. This particular block had alr­eady been allocated to a public sector mining firm, which did not carry out the exploration and ore prospecting work for five years. We are not in a position to force the PSU to return the land and hand it over to the private players.”

Under the new Mining Bill, the first report on prospecting has to be submitted by the third year and the second and the final report by the sixth year. If the prospecting reveals sizeable deposits, the firm concerned has to obtain the mining lease to commence operations between the third and the sixth year. If the firm is unable to detect sufficient deposit even after six years, the pro­specting licence will be deemed to have expired unless an extension is sought. The Bill states that when any firm fails to conduct any kind of reconnaissance or high technology reconnaissance-cum-exploration or prospe­cting or mining operations in accordance with the rules, the state government may issue a notice and sus­pend, curtail or revoke the licence or the lease after six years.

If a firm that fails to complete the prospecting within six years approaches the government seeking relief, then the prospecting licence period can be extended for a period of two years only depending on the merits of the case. A mining lease for a major mineral shall be granted for a period of not less than 20 years and not more than 30 years—another welcome development.
However, the Bill may lead to objections from foreign players because it favours the PSUs. Specific state-run companies have been granted exemption from seeking licence for reconnaissance or ore prospecting. They include Geological Survey of India, the Atomic Minerals Directorate, the Mineral Exploration Corporation, the Singareni Collieries, the Neyveli Lignite Corporation and the Central Mine Planning and Design Institute to name a few.

“Large firms can easily benefit from High Technology Reconnaissance-cum-Exploration Licence (HTREL),” pointed out Dr TH Hanumanthaiah, well-known geologist and retired professor of Geological Sciences, who works as a consultant for some top mining firms in India. “HTREL would be subject to rigo­rous requirements of technology inputs, financial investments and data disclosure and will only enable highly professional agencies to apply. The HTREL licence would be required to use high technology including advanced geophysics to locate deep-seated and concealed minerals and can apply for a direct mining lease based on the data.”

Depending on serendipity: For LAPL and HTREL to yield results in India, it is imperative that the ore pros­pecting firms use the latest technology to map mineral deposits. Minerals are one of the most spatially available resources and technology intervention will only add to the findings of new deposits. It is an old adage that explo­ration of mineral resources will not only provide an accurate figure of the deposits but also provide a direction to the industry dependent on it.

When the argument between the iron ore exporters lobby versus the steel producers over retaining the mineral as a strategic resource had reached an all-time high between 2000 and 2005 (the boom period), the IBM data revealed that extensive mining had led to discovery of new deposits.

While 215 million tonne of high-grade (containing ferrous content in excess of 65 per cent) iron ore lumps and fines were produced between 2000 and 2005, the total high-grade iron ore resources in the country went up by 533 million tonne to touch 1,933 million tonne from 1,400 million tonne.

“This only shows that more mining and exploration will lead to discovery of new deposits of minerals. But this tussle between the exporters and steel producers has to end. The only way of ending this fight is carrying out accurate exploration and prospecting using the latest technology. If we take this tussle as an instance, we have an excellent platform to scientifically assess the mineral resources of the nation. Technology is no more an impediment for the modernisation of the mining industry,” said Ashok.

Low response to hi-tech

Some of the top mining firms in the world use a combination of technology to accurately assess the min­eral deposits in a particular area. Geographic Information System (GIS) has emerged as the most reliable tool used these days by the mining firms to map the mineral resou­rces for every acre. The GIS can collect data, compile it and archive it eventually forming an information minefield. Coupling GIS with geomatics mapping using computer simulation models will create multilayered renderings of mineral deposits even to the depth of 100 m with fair accuracy. “Unfortunately, not even a single company in India is using any of these latest technologies. They are still dependent on the 20 year old maps,” lamented Dr Hanumanthaiah.

Satellite mapping is used extensively in Australia and Brazil to determine the depth of the ore deposits. Hidden topological features are revealed when multiple bands of light of varied wavelengths are employed.

However, the most popular technology used in the mining industry these days is the LIDAR (Light Detection and Ranging) for larger areas. This is used specifically for surface minerals spread across several kilometres, and makes an ideal proposition for a terrain like India. LIDAR is widely used for mapping coal and iron ore deposits. In India, at present, there are reported to be only two mining firms—Sesa Goa and National Mineral Development Corporation (NMDC)—that use a com­bination of all these technologies to predict accurate data on ore deposits.

Prospecting and viability: According to the new Mining Bill, any state government may specify that any application received will be considered based on financial bid at the time of mining or royalty or a profit sharing of mineral production “as per the weightage assigned states to call for financial bids even at the pre-mining stage of prospecting the mineral.” Experts are of the opinion that this clause will ensure the financial viability of the pro­ject because the lease-holder is assured of mineral depo­sits as mapped by the state government. The lease-holder does not run the risk of investing on unviable mining operations.

Marking out the areas for mining in the pre-bidding process after surveillance using new technology will facilitate viability.

Mine owners are also optimistic that the new Mining Bill would usher in rapid reforms. “Unfortunately, we
are not in a position to make our demand clear because of the uncertainty over the implementation of the Bill in spirit and deed. We only hope that this Bill brings in the much required relief to the mining sector,” summarised Rajneesh Goyal, CNC Mining Syndicate.

Unfortunately, the Bill does not clearly spell out the exact terms and references of high-technology reconnaissance. This new Bill can open up huge business opportunities for tech­nology providers in the space of mineral wealth explo­ration and prospecting. Smaller countries like Indonesia, which do not have larger dep­osits of ore other than coal are more competent in using such tools. In India, though, the market for such high-end reconnaissance technology is nascent. Not many technology providers are willing to set up shop easily in India because they feel it is too early to step into the country going by past experiences. Mining has become a sensitive issue world and investments in the absence of a concrete plan may not yield return on investments.

“We were highly enthused about bringing in some of these latest ore prospecting technologies into India, but the response is not positive,” noted B Manjunathan, CEO, Data Mining Spatial Services Ltd. “We feel that tech­nology-intensive ore exploration should be man­dated by law when the new Bill becomes an Act.”

Technology apart, the states, considered now as integral stakeholders of the mining industry, are emp­owered to sanction leases, undertake ore prospecting and exploration and then call for bids for exploitation of resources under the new Mining Bill. Deposits of even commercially profitable minerals can be prospected and explored by the states before calling for bids.