Indian Mining Industry

Industry Description
Mineral production in India is primarily concentrated in Andhra Pradesh, Chhattisgarh, Jharkhand, Rajasthan and Orissa. These States account for more than 40% of national mineral production in FY 13 in terms of value. Mining Industry contribution to Indian GDP has been 2.26% in FY 2012-13 Major Minerals being imported in India are : a) Rough Diamond b) Gold c) Copper Concentrate d) Zinc Concentrate e) Potash f) Tungsten g) Metallurgical/ Coaking coal h) Tungsten

Continued
Third-largest coal producer - Coal production has increased at a five-year CAGR of 4.6 per cent to 540 million tones in FY2013 making India the third largest producer in the world. Further, India has the fifth largest coal reserves in the world Fourth-largest iron ore producer - Iron ore production expanded at a CAGR of 3.2 per cent during FY08-12. Based on iron ore production, India ranks fourth globally Second-largest steel by 2015 - India is slated to become the second-largest steel producer by 2015. Crude steel production increased at a CAGR of 7.7 per cent over 2005-12 Fifth-largest bauxite reserves - India has the fifth-largest bauxite reserves, with deposits of about 3 billion tones or 5 per cent of world deposits. Aluminum production is estimated to be 4.7 million tones per annum during 2012-17

Size and revenue

State wise Revenue

Regulatory framework
Indian Bureau of Mines is the regulator to approve Mining Plans and Mine Closure Plans keeping in mind conservation of minerals Overall Law & Regulations framed by the Federal Government Mines & Minerals (Development & Regulation) Act, 1957 & Rules there under; (MMDR) Marine mining, Coal & Lignite administered by the Federal Government; For ten Major Minerals and Atomic Minerals Provinces need to seek prior clearances from Federal Government for granting licenses. Mineral Concessions are granted by the State Government; For grant of any type of concession,
The person should be an Indian National, or Company should be registered Indian company Reconnaissance Permit (R.P.) 10,000 sq. km Prospecting License (P.L.) 25 sq.km. Mining Lease (M.L.) 10 sq.km.

Area Limits:

Area limits can be relaxed by the Central Government; Periods of Concessions:

Reconnaissance Permit (R.P.) 3 years Prospecting License (P.L.) 3years +2years (max. -5 yrs.) Mining Lease (M.L.) 30 yrs.(max.) / 20yrs. (min.)

National Mineral policy of 2003 paved way for foreign companies to invest in Indian Mining Industry

Regulatory Framework Cont

Challenges in NMP 2003 Small size of PLs and MLs at 25sq Km and 10 Sq Km respectively No adherence to time limits : It may take 3months to 3 years for all requisite approvals No level Playing field, Public sector companies were given priority in allocation of licenses No significant government concession in terms of tax rebates and cheap allocation of funds for exploration Lack of exploration : GSI was overstretched due to its scarce resources. Procedural Complexities: Large number of approvals needs to be undertaken under MMDR act, MCR, MCDR, Forest Conservation act and Environment protection act. Security of tenure : No security of tenure between RP and ML stages

Regulatory Framework Cont

Business Cycle effect

The demand for many mineral commodities is particularly responsive to income changes caused by business cycle fluctuations. Metals and other materials, in particular, are consumed primarily in the capital equipment, construction, transportation, and consumer durable sectors of the economy, which use them to produce automobiles, refrigerators, homes and office buildings, new machinery, and other such items. These sectors boom when the economy is doing well, and suffer severely when it falters. Since small fluctuations in the business cycle cause major changes in their output and in turn the demand for materials, the income elasticity is normally greater than one when the business cycle is responsible for changes in income. Sustained growth in Indias automotive sector has been driving demand for steel and aluminum. Production of automobiles incre ased at a CAGR of 12.2 per cent over FY0513 The power sector accounts for a large share of the consumption of aluminum and coal in the country. Power generation in India expanded at a CAGR of 5.7 per cent during FY0613. Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminum producers .Indias infrastructure sector expanded at a CAGR of 15.8 per cent over FY08-12. Iron and steel being a core, demand for these metals is set to continue given strong growth expectations for the residential and commercial building industry Cement production increased at a CAGR of 9.7 per cent to 272 million tones over FY06 13 which has contributed to sustained growth in coal demand