Aggressive exploration programmes will ensure raw material security

A sustainable mining industry will contribute to long term development of infrastructure and economic diversification. AK Bhandari, Advisor, Federation of Indian Mineral Industries (FIMI), talking to Sumantra Das, stresses on the need for a sustainable mining industry.

Globally, minerals and metal prices have been volatile for quite some time. How is Indian mining industry coping with this scenario?
Globally, the demand-supply equilibrium is responsible for the volatility in mineral and metal prices. It is a response to the rising demand, changing consumption patterns and higher production costs. The Indian mining industry comprises mining, stand alone smelting and integrated producers with captive mines. Commodities like iron ore, lead, zinc, copper, and aluminium whose pricing is determined on international benchmarks is affecting the price volatility.

What are the major issues that hamper private participation in mining sector?
Mining in India is dominated by the state sector which accounts for 66 per cent of overall production. Delays and lack of transparency in grant of concessions, poor infrastructure, unfavourable royalty, high taxation and red tape are the major deterrent for private investments.

How will higher exploration and mining output provide sustainability to the economy, balance of payments, exchange rates and inflation?
Aggressive exploration programmes will lead to establishing new mines. It will ensure future access to resources while ensuring raw material security and reduce import dependency. A sustainable mining industry will contribute to long term development of infrastructure and economic diversification. With the right kind of support, the mining sector has the potential to add $210 billion to $250 billion to GDP (both direct and indirect contribution) by 2025, create jobs, and generate $55 to 70 billion of revenue to the central and the state governments through corporate taxes royalty and export duty collections by 2025.

What are the government initiatives on mining that can attract investment?
Despite opening up of the mineral sector for 100 per cent FDI since February 2000 there has been hardly any inflow of investment, domestic and foreign, in exploration and mining sector. To attract investment in the sector, the emphasis should be on the following:

• Provide for a simple and transparent mechanism for grant of mining lease or prospecting licences through competitive bidding in areas of known mineralisation and on the basis of first-in-time in areas where mineralisation is not known.
• Expedite clearance of 47,933 applications for grant of mineral concessions pending with the state and 229 proposals pending with the Ministry of Mines.
• Seamless transition from Reconnaissance (RP) to Prospective Licence (PL) to Mining Lease (ML) and security of tenure.
• Easy transferability/sale of PL to adjoining PL holders/mining lessees but restricts the transfer of mining lease.
• Encourage private sector participation in exploration of deep-seated and concealed mineral deposits, especially of metals in short-supply by adopting advance and sophisticated technologies.
• Institutionalize a statutory mechanism for ensuring sustainable mining with adequate concerns for environment and socioeconomic issues in the mining areas, through the National Sustainable Development Framework;
• Mining industry in India at 52 per cent tax rate is the highest taxed industry in the world. Rationalise and reduce the royalty rates and corporate taxes to make it attractive.
• Need amendments in the Mines and Minerals Development and Regulation Bill 2011 to make it investor-friendly.