India has long been recognised as a country well endowed with minerals such as iron ore, bauxite, coal, limestone and manganese and is among the top 10 producers of these ores globally. Of the states, Chhattisgarh, Jharkhand and Odisha are the most mineral-rich. The mining sector currently contributes 2.5 per cent of GDP, and during April-November 2018, production in the mining sector grew by 3.7 per cent, as compared to a growth of 3 per cent during the corresponding period of 2017.
Industry at a glance
The country produced minerals worth Rs 1.13 trillion in 2017-18, registering an increase of 13 per cent over the previous year. According to the Ministry of Mines Annual Report 2017-18, minerals worth Rs 1 trillion (provisional) were produced in 2016-17. For 2017-18, the estimated value of metallic minerals was Rs 530.29 billion and that of non-metallic minerals (including minor minerals) was Rs 605.12 billion.
The domestic mining sector is characterised by a large number of small operational mines. The number of mines in the country, which reported mineral output, excluding atomic fuel and minor minerals, was 1,531 in 2017-18 as compared to 1,508 in 2016-17. Of the 1,531 reporting mines, 230 are located in Tamil Nadu, 197 in Madhya Pradesh, 191 in Gujarat, 142 in Karnataka, 132 in Odisha, 129 in Andhra Pradesh, 112 in Chhattisgarh, 87 in Goa, 85 in Rajasthan, 75 in Maharashtra and 58 in Jharkhand. These 11 states together accounted for 94 per cent of the total number of mines in 2017-18.
Exploration and production
Traditionally, India’s exploration spend has been low as compared to other mining countries. It accounts for a meagre 0.4 per cent of the global exploration expenditure vis-à-vis 14 per cent for Canada and 12 per cent for Australia. Governments of mineral-rich countries such as the US, Canada, Australia, Brazil, South Africa, Chile and Mexico have created a facilitative ecosystem for exploration by providing the necessary data to private companies. In these countries, private companies carry out exploration and enjoy the leeway to sell or transfer mineral concessions. They take the lead in greenfield exploration by raising venture capital funds from stock exchanges. In contrast, mineral exploration in India is done under government tutelage. With the launch of the New Mineral Exploration Policy (NMEP) in 2016, the government is now aiming to solicit private participation in exploration activities. The National Mineral Exploration Trust has also been established to encourage exploration activities and keep a check on illegal mining. The recent introduction of National Mineral Policy, 2019, is a welcome step for the mineral exploration segment.
All-India raw coal production increased from 565.77 million tonnes (mt) in 2013-14 to 676.48 mt in 2017-18. The absolute increase in coal production from 2013-14 to 2017-18 was 110.71 mt as compared to an increase of 33.73 mt from 2009-10 to 2013-14. Further, during the current fiscal year (April-November 2018), coal production stood at 433.9 mt with a growth rate of 9.8 per cent over the corresponding period of the previous year. Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) are the two largest coal miners in the country. CIL produced 469.65 mt of coal in 2018-19 (till January 2019) while SCCL’s coal production during the same period was 51.86 mt.
The move to allow the private sector to commercially mine coal will boost both production and mining efficiency. Imports by independent thermal power plants and captive power plants can be substituted with domestic coal once commercial mining picks up. As for coking coal, the benefits are moderate because India has limited reserves of the fuel. The benefits from increased private participation in coal mining, though, will depend on faster environmental clearances and availability of adequate evacuation infrastructure. Prudent bidding will also be required from bidders to ensure successful commercialisation of coal mining.
More recently, the government approved a policy which allows owners of captive coal mines to sell 25 per cent of their output in the open market. The move seeks to increase competitiveness and address the tepid response to captive coal mine auctions. Despite cabinet approval, the government may not conduct auctions for commercial coal mining until after the upcoming general elections.
With regard to auctions, 31 coal mines have been auctioned to private and government firms. Of these, 25 have been allocated by way of auctions while the remaining six have been cancelled. Meanwhile, 19 coal blocks have been allocated through the allotment route to central/state government companies. In the fourth tranche of auctions, nine coal mines were put up for auction for the iron and steel, cement and captive power sectors. Due to the poor response, the online bids were not opened and the fourth tranche of auctions was cancelled. In the fifth tranche, six coal mines were put up for auction, with iron and steel production as the specified end use. As there were fewer than three bidders, this round too was cancelled. The lukewarm response could be attributed to adverse market conditions in the steel industry.
Digital transformation and adoption of smart technologies has become a priority agenda of every sector. Mining companies too are slowly turning towards cost-effective digital and automated technologies for their mines to ensure high levels of productivity and safety. Though technologies for more efficient production are available globally, the level of technology deployment in the domestic mining industry is yet to mature fully.
Mining in India is still done in a traditional manner – drilling, blasting, loading, haulage, crushing and mineral processing. Batch processing dominates the sector. There is a need to speed up technological development and find new solutions to develop a continuous mining process. The largest shovels deployed in the
country have a bucket capacity of 42 cubic metres and dumpers are of 240 tonne capacity. Though these are an improvement over what was used in the past, they are still relatively small as compared to the largest available globally. The highest capacity of dumpers being used globally is around 400 tonnes. Large capacity equipment provides economies of scale while smaller capacity equipment provides flexibility in operations and cost efficiencies due to lower capital costs and fuel consumption. There is a discernible, though gradual, trend towards the use of higher capacity excavators and trucks in mining projects in the country.
The key solution to achieving higher automation is to collaborate with global mining companies, original equipment manufacturers, global technical experts and consultants, and scientific and regulatory institutions. Collaborative efforts are likely to scale up technology adoption. The appointment of mine developers and operators (MDOs) is one of the approaches being increasingly preferred by mining companies. MDOs can bring the latest technologies and mine management practices, and thus lead to improved efficiency in mining operations.
Issues and challenges
Some of the pressing concerns that impact the mining sector and warrant immediate attention are land availability, shortage of skilled manpower, financial constraints, low productivity of equipment, and environmental issues. There are problems with regard to technology deployment as well. With incompatible and non-integrated IT solutions being used in silos and most of the data generated not being used, the level of technology deployment is yet to be ramped up. There are promising technologies available, but it will take time for these to be adopted. Financial constraints have been cited as a key factor that has led to low levels of technology uptake in the sector so far. Regulatory issues, poor supporting infrastructure, financial concerns, and global factors leading to price volatility are other issues that impact the mining industry.
The way forward
Going forward, there is a need for increasing use of IT and automation in mining operations. This could help in better management of operations, reduction in pilferage and improvements in safety levels. The sector requires innovative solutions for sustainable mining. Adoption of selective blasting techniques could help increase the metal content of the ore, reduce waste, save energy, and reduce greenhouse gas emissions.