Engineering & Mining Journal

JAN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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INDIA MINING REPORT 42 E&MJ • JANUARY 2019 www.e-mj.com "Time is short. If you have to achieve much, you've got to run," said Peter Munk, founder and former chairman, Barrick Gold. The Indian mining industry prom- ised to achieve much. But it is definitely not running and time is running out, too. Gaps between enunciation of lofty po- tential and policy procrastinations, delays and actual performance of the sector, in- cluding investments on the ground have become glaring. The adage sometime attributed to Thom- as Edison, "Vision without implementation is just hallucination," could well describe the Indian mining sector in recent times. A grandiosely titled report, "Unlock- ing potential of Indian Mineral Sector," of the federal Ministry of Mines laid out a vision of adding investments of $250 billion and 6%-7% of GDP with collateral benefit of creating 15 million additional direct and indirect employment by 2025. The vision statement was in 2011. Sev- en years down the line, the mining industry has not exactly inched toward such a goal. In fact, contribution of the Indian mining sector to Gross Domestic Product (GDP) has been on a downward trend from 3.2% in 2012 to 2.2% in 2018, according to data sourced from the government's Ministry of Statistics and Program Implementation. Data on Index of Industrial Production (IIP) released by the government in Oc- tober 2018, showed that industrial pro- duction growth in August 2018 was at a three-month low at 4.3% with the mining sector proving to be the primary drag, re- cording a negative growth of 0.4% in Au- gust compared to 9.3% the same month a year ago. The mining industry has the sec- ond highest weightage in IIP at 14.6%. The Exploration Logjam The vision: the government outlining it, stated its intention of publishing a new national mineral policy, which inter alia laid down the road map of doubling min- eral exploration every year with partici- pation of private investment — domestic and foreign direct investment (FDI). It was expected that private investments would plug the huge gap as exploration pro- jects solely through government public ex- penditure had been sorely inadequate and a new policy would woo global resource ma- jors to invest in such projects in the country. A reality check: The policy framework for years allowed 100% foreign direct in- vestments in mining and mineral projects in the country barring atomic minerals. Optimism over a new policy attracting fresh foreign investments into exploration is tempered by recent data. In 2017-2018, FDI in the Indian min- ing industry fell to the lowest level in re- cent years at a mere $36 million down from a peak of $659 million touched in 2014-2015. The previous low of FDI in mining industry was in 2013-2014 when it hit a low of $13 million. As a share of total FDI inflow into the country, the mining sector accounted for just 0.8% of the total FDI during 2017- 2018 against a share of 2.06% in 2014- 2015, and an indication of unattractive- ness of the domestic mining industry to overseas investors. Underlining "under exploration" the government policy think-tank reported that Indian exploration expenditure av- eraged around $17/km 2 against $5,850/ km 2 in Australia and $5,310/km 2 in Can- ada. In terms of global share of explora- tion expenditure, Canada was ranked in first in the pecking order with 14%, Aus- tralia at 13%, China, 6%, and Europe, 5%, and India lagging at 0.2%. Information from the Indian Bureau of Mines (IBM), the government regulatory body, of India's entire Obvious Geological Potential (OGP), area of 570,000 km 2 , identified by state-run, Geological Survey of India (GSI), only 10% has been ex- plored and mining operational in 1.5% to 2% of this area. Years of under-exploration was begin- ning to takes its toll on mineral industries with imports rising despite abundant mineral reserves. The compounded annu- al average growth rate (CAGR) of Indian mineral imports between fiscal year 2012 and fiscal year 2018 was 6.1% which in value terms increased from $15.81 bil- lion in fiscal year 2012 to $28.14 billion in fiscal year 2018. Simply put, trade data revealed that during 2016-2017, for every 1 ton of do- mestic mineral production, downstream mineral processing industry imported about 10 tons of mineral resources. An Overview of Metal Mining in India One step forward, two steps back By Ajoy K Das A mine truck exits the portal at Hindustan Zinc's Sindesar Khurd mine, the largest underground mine in India. Indian Production and Imports in Value Value of Value of Year major minerals minerals produced imported 2013-2014 499.06 3,364.51 2014-2015 444.05 3,364.51 2015-2016 411.93 3,668.38 2016-2017 474.31 3,458.11 2017-2018 607.30 3,500.00 • All figures in billion Rupees • Source; Ministry of Mines

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