Despite huge potential, the country’s mining sector is highly underdeveloped. The sector needs to deploy global technologies for improving its productivity and achieving sustainable growth. In the past decade, a number of mines have been closed or have had production suspended due to judicial intervention in mining regions such as Karnataka, Goa and Odisha. Added to the woes is the amendment in the Mines and Minerals (Development and Regulation) (Amendment) Act, 2015, that has mandated that certain mining leases (MLs) will expire in March 2020. To address this issue, the Mineral Laws (Amendment) Ordinance, 2020, was promulgated to begin auctions of iron ore MLs before they expire in March this year. Recently, Odisha conducted an auction of 20 lapsing merchant mines that received an overwhelming response.
According to a study conducted by the Confederation of Indian Industry, the mining industry’s share in GDP (in real terms) in 2018-19 was at a low of 2.6 per cent, down from 3 per cent in 2011-12. Foreign direct investment (FDI) inflows into the sector declined from 2.1 per cent of total FDI inflows in 2014-15 to 0.5 per cent in 2018-19. In September 2019, 100 per cent FDI under the automatic approval route was permitted for the sale of coal and in coal mining activities, including associated processing infrastructure. This is expected to improve fund inflows.
Mineral Laws (Amendment) Ordinance, 2020
The Mineral Laws (Amendment) Ordinance, 2020, promulgated on January 11, 2020, aims to open up the coal mining sector completely for commercial mining. The ordinance allows any India-registered company to bid for and develop coal blocks, and puts an end to captive coal block auctions. Besides, the ordinance permits the automatic transfer of environment and forest clearances for iron ore mines, thereby assuring raw material supplies for domestic industries. The move will help create an efficient energy market, usher in competition and reduce coal imports.
Exploration scenario
Traditionally, India’s exploration spend has been low as compared to other mining economies. 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. The world over, mineral deposit-
specific process research and development (R&D) is funded by the private sector mostly using venture capital. However, in India, private sector participation in exploration activities is very limited at present.
With the launch of the New Mineral Exploration Policy (NMEP) in 2016, the government aims to solicit private participation in exploration activities. Also, a National Mineral Exploration Trust has been established to encourage exploration activities and keep a check on illegal mining. The National Mineral Policy, 2019, is a welcome step in the mineral exploration space. The policy will incentivise private players to carry out exploration activities through the right of first refusal at the time of auction, via a simpler and transparent clearance process, or any other appropriate route as per international practices.
Technology penetration
India lags behind developed countries such as the US and Australia in terms of optimal resource optimisation due to suboptimal technology use at the planning and operation stage. Amidst the fast pace of automation in mining operations globally, India announced its first mining automation project – a joint venture between Finnish-Russian digital solutions provider Zyfra and domestic firm Thriveni Earth-movers Private Limited. Thriveni operates NTPC’s flagship PakriBarwadih coal mining project in Jharkhand. Zyfra has won the contract to implement its intelligent mine solution at the mining project. The intelligent mine solution includes a mine fleet management system, an automated drilling and blasting control system, and a payload and fuel-level monitoring system.
With civilian drones now largely outnumbering military drones, the government is ur-ging public sector undertakings to use them for mine-related applications. In November 2019, Coal India Limited used drones to check illegal mining and pilferage. Skylark Drones also worked with Tata Steel on mining projects, wherein drones were able to increase efficiency by providing an estimate of how much iron ore was being extracted every day.
In sum
There is significant scope for setting up new iron ore, bauxite and coal mining capacities and considerable opportunities for future discovery of subsurface deposits. The Geological Survey of India has almost doubled exploration activity by implementing about 400 mineral exploration projects for various mineral commodities. Going forward, specialised venture capital-based exploration companies need to be incentivised to undertake deep exploration using advanced technologies. The auction process too needs to be streamlined to lead to greater efficiency and more effective outcomes.