India is rich in minerals and only a fraction of its potential has been explored resulting in major imports. The Government’s target is to increase the share of mining and quarry to the country’s GDP by additional 1% from current 2.4%. Further, its dependence on imports in the Mining Industry is another focus point. The industrial production for mining posted a growth rate of 5.3% in January 2017.
The Mines Ministry is currently preparing 150-200 mineral blocks for auction in 2017-2018 to increase exploration. The aim is to increase the sectors share in the country’s economic output. India has also launched its biggest aero geophysical survey for unearth deep-seated mineral resources. The survey will cover an area of more than 200,000 km2 across seven states (Rajasthan, Andhra Pradesh, Gujarat, Karnataka, Odisha, Jharkhand and Madhya Pradesh). The generated data will be made public for domestic and foreign companies to consider mining in the country.
To boost mineral exploration, the Government has released a new scheme for rewarding exploration companies with an upfront payment. Based on recoverable resources, the payment will be either 0.5% of the reserve value or 10 times the monthly retention fee for the explorer. This amount will then be recovered by the Government from the winning bidder when the block is subsequently auctioned for mineral production. More than 50 blocks have been identified for exploration.
Coal is the largest solid mineral produced in the country. Coal mining in the country was nationalised since 1973, later the Government had allotted seven blocks for commercial mining to state government entities with a condition to sell the commercially-mined coal to small, medium and cottage enterprises. This year the Government plans to allow commercial mining by private companies without specifying the end-use of the mined coal and sale in the open market will be allowed. The Coal Ministry has identified 23 blocks for auctioning in 2017-2018 of which 16 coal blocks are allocated for commercial mining – four have been identified for auctioning in the first phase. This decision to open up coal mining to the private sector may increase domestic production of coal by 500 million tonne per annum. The goal is to achieve 1.5 billion tonne per year production by 2020 and potentially stop imports of coal.
During April-October 2016, the Iron ore production increased by 22% (third largest solid mineral produced in the country), while the exports in the period between April-September 2016 increased by nine times. The market for Iron ore looks promising as the price in the global market has moved up from $40 per tonne to $70 per tonne in the last few months. With a projection of an average annual growth of 6.9% during 2017-2021, the country’s iron ore production is expected to reach 185 million tonne by 2021.
All the major steel producing countries in the world experienced a significant decline in production in 2016. India being the only exception who registered a 6% growth with a production of 79.2 million tonne. The global unfavorable market has affected India too but the country’s focus on improving infrastructure in the current year will be a major boost for the steel industry. The Union Budget 2017-2018 released on 1st February 2017 also brought a positive outlook for the steel industry by waiving basic custom duty on nickel imports (a key steel making raw material).
To enhance production and reduce imports, technology upgradation and digitalization is much needed in the Mining Sector. Main reasons hindering growth in the industry are the absence of geophysical and geochemical data and the use of outdated and time consuming equipment. The Union Minister of mines, Piyush Goyal, pushes for the usage of latest technologies like drones or unmanned aerial vehicles (UAVs) to increase efficiency in the sector. Technology can be used for preparation and monitoring of mining plans, area inspection, production and exploration, dispatch and checking illegal mining activities. Companies are also adopting modern advanced technologies to grow sustainably. The iron ore mine of Tata Steel in Jharkhand, with an aim to keep in pace with global trends, is India’s first mine to implement drone technology. It will be used for mine monitoring, environment monitoring, lease boundary inspection, reclamation and rehabilitation. Tractors India Private Limited has partnered with RungePincockMinarco (RPM) to deliver value-added technology solutions to Indian Mining Companies for Digital Mines.
There is a lot of scope for foreign investment in the Metallurgy & Mining Industry in India. Be it companies interested to undertake mining in the country or companies offering modern machinery and technologies that will make mining more efficient and sustainable. The Government’s focus on the industry, special schemes, increased private investment, and implementation of advanced technologies, will result in increased domestic production and reduce considerable dependency on mineral imports in the near future.
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