Positive Outcomes Ahead

Mining sector expected to see reforms-led growth

The mining sector has seen significant reforms in the recent past, which are ex­pe­cted to revive the sector and increase its contribution to economic growth. A number of reforms have been introduced in the past 15-20 months. These include removing the distinction between captive and merchant mines, allowing all captive mines to sell up to 50 per cent of the minerals produced during the year, reallocating non-producing blocks of state-ow­ned firms, simplifying the exploration regime, and conducting future auctions without any end-use restriction. All these aim to provide a level playing field between private enterprises and state-owned companies.

The most important legislative change was the enactment of the Mines and Minerals (De­velopment and Regulation) Amendment Act, 2021. The objective of the act is to abundantly utilise the potential of the mining sector so as to enhance employment opportunities and attract private investments in this space. The intention also is to increase the revenue to the states along with time-bound operationalisation of mines.

Last year, the government amended the mi­neral auction rules to encourage competition. The Ministry of Mines has notified the Minerals (Evidence of Mineral Contents) Se­co­nd Amendment Rules, 2021, and the Mineral (Auction) Fourth Amendment Rules, 2021. These amendments are aimed at identifying more mineral blocks for auction for composite licences and thereby increasing the pace of exploration and production.

Update on auctions

In the first ever tranche of commercial auction, the Ministry of Coal completed the auction pro­cess for 38 coal mines in the first round of auction for commercial mining, which was laun­ched in June 2020. Of the 38 mines on offer, 20 were successfully auctioned, with a success rate of 53 per cent. For the subsequent round of auctions for commercial mining, the second tran­c­he, a total of 67 coal mines are being offered, of which 37 are fully explored and 30 are partially explored blocks. To cater to the de­ma­nd of coking coal consumers, six coking coal mines have also been put on offer.

During January 2022, 14 mineral blocks (se­ven limestone, two iron ore, two mangan­e­se, one bauxite, one rock phosphate and one kyanite) were successfully auctioned in Karna­taka, Madhya Pradesh, Maharashtra and Raj­asthan. With the active cooperation of the state governments, more than 145 mineral blocks have be­en successfully auctioned since 2015-16, with 37 blocks auctioned in 2021-22 alone.

Technology moves

Drone surveys have been made mandatory by the government. Lessees with an annual excavation plan of 1 million tonnes or more or a lea­s­ed area of 50 hectares or more are required to submit drone survey images of the leased area and up to 100 metres outside the lease boundary every year. This will not only improve mine planning practices and security and safety in the mines but also ensure better supervision of mining operations.

The mining sector is equipping itself heavily with drones to conduct regular business operations. NMDC recently signed an MoU with IIT Kharagpur for drone-based mineral exploration. Tata Steel partnered with Skylark Drones in 2017 for the pilot launch of drone application in mine monitoring at its Noamundi iron mine.

Firms are increasingly adopting technologies in mining and allied industries. For instan­ce, Hindustan Zinc Limited agreed to introduce battery electric vehicles for underground mining in February 2021. Meanwhile, Coal India Limited plans to use the latest version of the Geovia Minex software for opencast mines.

In sum

The government has been looking to push mining reforms since early 2020. While most of the amendments have been welcomed as being progressive, some of them have been mired in controversy. However, any public policy, no matter how effective it seems, has to stand the test of time and judicial review. The recent reforms are expected to boost exploration activities, increase private participation and improve ease of doing business. In addition, the government is planning dedicated mineral corridors to facilitate the transportation of minerals from mining areas in the hinterland, along with local evacuation networks to be built in an integrated manner.

The onset of Covid-19 has had implications for the mining industry, particularly for production and project execution. Minerals that are traded have also suffered owing to the disruption in global supply chains. However, mining companies have shown remarkable resilience and have continued operations to the extent possible; overall showing reasonable production trends.

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