India Mining Strategic Plan 2011

8/3/2019 India Mining Strategic Plan 2011

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STRATEGIC PLAN

FOR

MINISTRY OF MINES


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3. FUNCTIONS

Ministry of Mines is responsible for survey and exploration of all minerals,

other than natural gases, petroleum and atomic minerals; for mining and

metallurgy of non-ferrous metals like aluminium, copper, zinc, lead, gold,

nickel etc. and for administration of the Mines and Minerals (Development

and Regulation) Act, 1957 in respect of all mines and minerals other than

coal, natural gas and petroleum. A list of subjects allocated to the Ministry

of Mines, attached / subordinate offices, Public Sector Undertakings and

Research Institutions under the administrative control of Ministry of Mines

is given below :-

(a) Legislation for regulation of mines and development of minerals within

the territory of India, including mines and minerals underlying the ocean

within the territorial waters or the continental shelf, or the exclusive

economic zone and other maritime zones of India as may be specified,

from time to time by or under any law made by Parliament.

(b) Regulation of mines and development of minerals other than Coal,

Lignite and Sand for stowing and any other mineral declared as

prescribed substances for the purpose of the Atomic Energy Act, 1962

(33 of 1962) under the control of the Union as declared by law,

including questions concerning regulation and development of minerals

in various States and the matters connected therewith or incidental

thereto.

(c) All other metals and minerals not specifically allotted to any other

Ministry/Department, such as Aluminium, Zinc, Copper, Gold,

Diamonds, Lead and Nickel.


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(d) Planning, development and control of, and assistance to, all industries

dealt with by the Ministry.

(e) Geological Survey of India

(f) Indian Bureau of Mines

(g) Metallurgical Grade Silicon.

4. ASSESSMENT OF SITUATION

4.1 As per the Seventh Schedule to the Constitution in terms of the

provisions of Article 246, mining and mineral development is allocated tothe Central and the State Government.

4.2 As per the Constitutional provisions, the State Governments, as the

owners of the minerals, grant mineral concessions for exploration and

mining of minerals. However, in the exercise of the powers vested by the

Constitution of India, Parliament after declaring it to be in expedient in the

public interest has enacted the Mines and Minerals (Development and

Regulation) Act, 1957 (MMDR Act). The MMDR Act enables all the

States to exercise their powers within a uniform national framework. It can

be then stated that the powers of the State Governments stand denuded to

that extent so far as the Parliament has legislated on a subject. This is not a

case of concurrent subject in the Seventh Schedule to the Constitution of

India, but a case of a subject matter in the List II of the Seventh schedule of

the Constitution being curtailed to the extent by the exercise of powers under

List I of Seventh schedule of the Constitution in public interest.


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4.3. Since State Governments are owners of minerals in their respective

jurisdiction, the royalty and other revenues are collected by the State

Governments and credited to the Consolidated Fund of the State.

4.4 In order to regulate mining activities in the offshore areas, there is a

separate enactment, Offshore Areas Minerals (Development and

Regulation) Act, 2002 for this purpose, and the mineral concessions for

offshore areas will be given directly by the Central Government in such

cases and royalty will be credited to the Consolidated Fund of India. The

administering authority for offshore areas, including concession

management, is done by the Indian Bureau of Mines, a subordinate office of

the Ministry of Mines.

4.5. Reconnaissance permit and prospecting licence are licences issued by

the State Government for onshore areas, and by the Central Government for

the offshore areas. Mining leases on the other hand are lease agreements

entered into by the lessee (concessionaire) with the State Governments in the

case of onshore minerals in terms of the section 5(1) of the MMDR Act. The

lease agreement in the case of onshore areas describes the property with

reference to the revenue records as maintained by the respective State

Governments. In case of offshore areas, mining leases will be executed with

the Central Government (through the Indian Bureau of Mines etc).

4.6 EXTERNAL FACTORS IMPACTING THE MINING SECTOR:

Opportunities

Mining and metals sectors can play a critical role in the economic

development, attracting investment and employment generation in the

country. The demand for various metals and minerals will grow 4-5

times over the next 15 years (9-11% growth per annum) against a


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backdrop of globally dwindling and increasingly scarce resources.

There will be huge demand for the metals in view of the rapid

urbanisation and growth in the manufacturing sector in India as

shown below in Figure 1. The mineral sector needs to prepare for

facing the challenges in view of increasing demand and reducing

resources world over.

Figure 1. Metals demand in India will increase 4 to 5 times over 15 years

2010

Steel demandMillion tons

Aluminum demandMillion tons

275

60

2025

8.5

1.6

20252010

Copper demandMillion tons

2010

2.4

0.6

2025

With the mineral potential in India, the contribution of the mining

sector in the GDP should aspire to increase from 2.3% currently to

around 7-8% over 20 years. The mining sector needs to play a major

role if India has to realize the potential growth of 9%per annum in

the coming years. The importance of the sector in the growth of GDPin mineral rich countries indicates the opportunities available for

India (Figure 2).


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Figure 2. Mining industry in India accounts for 2% of the GDP while inAustralia and South Africa the share of mining industry in more than 8%

SOURCE: Global Insights

98 9692 91

98

100% =

Others

Mining

Brazil

1,270,425

2

South

Africa

240,913

9

Australia

899,495

8

China

4,772,760

4

India

1,088,168

2

Million dollars, 2009

Share in Mining Sector in GDP

Development of the minerals potential could also help in

mainstreaming the local communities (including tribal communities )

by sharing the economic benefits of mining related activities with

them in a fair and equitable manner through mechanism that give

them choices and enable them to adopt changes at a pace of their

choosing . Most of the mineral potential areas are in the interior

tribal areas of India , where the development is the lowest .The

mineral sector can potentially change the situation by providing

much needed employment and infrastructure creation needs. The per

capita GDP in these mineral rich, tribal dominated states vs. the

India average and a similar comparison in other countries indicates

the strategic need to unlock the potential of the mineral sector

(Figure 3).


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Figure 3. Unlike India, states with major mining and resource activity inAustralia and the US have higher GDP/capita compared to the respectivenational average

SOURCE: Mospi, Australian Bureau of Statistics, Bureau of Economic Analysis, US

GDP/capita, 2009

577

972

1,075

802

56,861

81,778

42,031

42,546

India

Chattisgarh

Orissa

Jharkhand

Australia

WesternAustralia

USA

Texas

USD

Technologically superior solutions and development are available to

be leveraged for exploration and utilization of low grade minerals.

Threats

Insufficient exploration. The reserves for iron ore and bauxite in

Australia grew 150 to 200% between 1985 and 2005. In contrast, in

India they increased by 10-20% only. Figure 4 represents the

phenomenal growth recorded in Western Australia


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Figure 4. Western Australia increased its minerals revenue 4000 times over44 years

SOURCE: Government of Western Australia

13

2008

51,300

1964

Mineral outputAUS$ million

21% CAGRover 44 years

At present the flow into the exploration efforts is meager in India ,

which needs urgent attention. Figure 5 details the position as

compared the world scenario.

Figure 5. Low investment in further exploration in India to develop

new resources

SOURCE: Metal economics group, 2008

5.0

6.0

6.0

7.0

12.019.0

31.0

India

0.5Othercountries

CanadaAustralia

United States

Russia

Mexico

Peru 4.0Chile

4.0

South Africa3.0

China

3.0

Brazil

Percent

Indias share in worldwide exploration ofnon ferrous minerals

India has a land Mass of~ 1.82 million sq. kms

3% (~ 56,000 ) hasbeen mapped geophysically

4% (~ 73,000 ) has

been mapped geochemically

Large land mass is yet tobe fully explored

ILLUSTRATED FOR NON FERROUS


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Historically, multiple issues have constrained the capture of the full

potential of the minerals wealth in the country. These include :-

Insufficient exploration,

Unattractive investment environment,

Lack of a clear system for disposal of government prospected

mineral ore bodies,

Poor performance of State Directorates of Mining and Geology

Perception of mining in terms of ecological & environment

practices,

Delays and uncertainty in the approval process,

Inadequate supporting infrastructure and insufficient legislative

framework (Act and Rules) and poor enforcement.

Social issues are becoming more prominent and are likely to

impose constraints on mining, if not addressed within a holistic

framework. These areas out of a feeling that benefits from mining

related activities are not flowing for local area development and

in fact revenue generated from mining is channelized for

development of other parts in the State.

Multiplicity of agencies in decision making leading to delays in

investment. The prospective investors need to interact and obtain

clearances from 10 different agencies (adding up to 90 desks)

compared to only 4 agencies and single window facilitation in

Western Australia. Consequently, the mining clearance in India takes


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4 to 7 years in an average compared to 18 months in Western

Australia.

5.1 OUR STAKEHOLDERS

Our key stakeholders include:

State governments

Concerned ministries (Ministry of Environment & Forests, Ministry of

Steel, Ministry of Tribal Affairs, Ministry of Coal, Ministry of

Commerce and Industries, Department of Atomic Energy, Ministry of

Chemical and Fertilizers, Planning Commission, Ministry of Railways,

Ministry of Shipping, Ministry of Roads & Surface Transport)

Industry players

Communities affected by mining operations

Civil Society Organisations (CSOs)

5.2. STRENGTHS OF THE MINISTRY

The country is blessed with large, high quality reserves of a large

number of minerals with potential resources of a large order locating to

be prospected.

Ministry is open to new ideas and well placed to provide sectoral policy

direction

Substantial debate has happened over the last 5 years amongst the

various stakeholders on the priorities for the mining sector providing a

robust platform to define reforms and the formulation of the National

Mineral Policy 2008


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Supporting institutions such as IBM and GSI with large S & T human

resources and knowledge.

5.3 WEAKNESSES OF THE MINISTRY

Many areas of NMP-2008 have not been operationalized leading to

suboptimal realization of potential.

Weak techno-economic expertise with the ministry and its agencies.

Key agencies such as, GSI and IBM are inadequately equipped and lack

skilled manpower at crucial levels, weakening the impact of the

Ministry.

Inadequate staffing in the Ministry, with insufficient in-house expertise

on technical, scientific regulatory and economic issues, particularly

multidisciplinary approaches and inability to access outsourced

expertise.

Lack of effective interaction forums with the stakeholders, including the

States, Industry and CSOs.

Ministry not keeping pace with the rapidly changing needs and

processes of mining industry and in creating suitable frame work for

the Indian mineral sector

5.4 LEARNING PRIORITIES

We can learn from the experience of countries such as Chile, Brazil andAustralia who successfully addressed similar issues in the past 2-3

decades as currently faced by the Indian mining sector e.g., expanding

the reserve base, expediting the clearance process.


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We can learn from other ministries and state governments to create

forums and mechanisms for seeking inputs and de-bottlenecking cross-

cutting initiatives.

6. OUTLINE OF THE STRATEGY

6.1 Potential strategies

We should build upon our strengths and address the historical weaknesses.

Broadly speaking this will involve building upon the various deliberations

and thinking done over the last few years (e.g., GSI reforms, IBM reforms,

MMDR Act, etc.), resolve the major issues in the plan/ legislation and then

getting them implemented systematically over the next few years through

well designed rules and guidelines. The role of a well equipped

implementational mechanism is crucial to the process.

6.2 Priorities

The following eight priorities in line with the objectives articulated in the

section 1B and the actionable points in the National Mineral Policy 2008.

Ensure early passage of the new Mines and Minerals (Development and

Regulation) Bill 2011, replacing the existing Mines and Minerals

(Development and Regulation) Act, 1957, after suitably addressing the

concerns of the relevant stakeholders [weightage: 20].

Substantially step up the exploration efforts on the high priority

minerals by redefining the role and capabilities of GSI, leveraging theexisting data with GSI, enhancing the private sector participation,

ensuring strict compliance and addressing the constraints of the current

concession process ( through legislation) [weightage: 20].


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Substantially enhance the effectiveness of GSI, IBM and PSUs by

redefining the mandate for them undertaking capability building and

setting in place an effective monitoring mechanism [weightage: 15].

Establish a forum and mechanism to interact with the key stakeholders

(including the industry players, states, concerned ministries, VC

investors), channelize their genuine requirements into the agenda of the

Ministry of Mines and facilitate timely implementation of initiatives

particularly infrastructure creation (e.g., rail infrastructure creation)

[weightage: 15].

Define guidelines and encourage compliance to scientific, sustainable

mining practices within a Sustainable Development Framework.

[weightage: 10].

Establish a system to bring in performance transparency across keyexternal processes (e.g., mineral concession process) and progress of

key internal initiatives (e.g., GSI and IBM reforms) [weightage: 10].

Help the Indian mining players acquire mineral resources globally

through G 2 G interventions facilitate B 2 G relationships though

support to exploration and human resource development through GSI

and MECL [weightage: 5].

Develop capability to access techno-economic policy options and inputs

for important issues such as value addition, beneficiation, venture


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capital, high technology exploration, strategic minerals, recycling

processes and technologies, mine closure etc.[weightage: 5].

6.3 Engaging stakeholders

This strategy would be largely driven by the Central Government and is

likely to help the various stakeholders not only in assessing the potential

growth avenues available to them and capitalizing on them, but also in

recognizing their role in the development of mineral sector. In order to do

so, the Central Government would be providing suitable formal and informal

platforms for stakeholder engagements at both the National and State level.

The initiative is likely to be welcomed globally by investors, since it would

set out the priorities of the Government for the sector, and allow the

investors to plan their operations. The State Governments are likely to be

engaged actively in a much more focused manner, which is important

considering the fact that they are the owners of on-shore minerals.

6.4 Building knowledge and capabilities

The Ministry of Mines has developed capacities for training, and Research

& Development in GSI and IBM. While upgradation of these facilities is

required, yet these facilities can form the base for imparting knowledge and

capabilities. Further, the capabilities can be enhanced further through regular

exchanges with the industry bodies elsewhere.

In addition, the ministry will study the good practices followed by other

countries.


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7. IMPLEMENTATION PLAN

The strategic plan sets out target for the Ministry with definite timelines.

Sl.

No.

Strategic Initiative Sub-Item MeasurableIndicator

1. Rework legislative

framework to bring

in transparency,

investor

confidence,

sustainability

concepts and

better regulation.

(i) Draft new legislation to

replace MMDR Act,

1957 and its Rules.

(ii)Create Independent

Regulators under new

Act.

(iii) Develop Sustainable

Development

Framework at Policy,

Regulatory and

Operational levels.

(iv) Position IBM as

technical regulator.

(v) Strengthen DGMs as

field regulators.

(i) New Act (by 2012)

New Rules (by

2013).

(ii) Appointment of

Regulators.

(iii) Roll out of

framework at

mine level.

(iv) Implement Report

on IBM (by 2012).

(v) Get State toprepare and

implement Action

Plan (by 2012).

2. Enhance

exploration activity

particularly for

base and strategic

minerals and rareearths.

(i) National Geochemical,

Geomorphological Map

and Aeromagnetic maps

on 1:50,000 scale.

(ii) Execute GSIs Phase-III

Portal Project to put out

precompetitive data.

(iii) Create mechanisms to

access venture capital.

(i) All existing

1:50,000 maps in

GIS environment

by 2013.

(ii) By 2015.

(iii) Document

prepared in

collaboration with

DEA (Cap


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(iv) Publish Detailed

Information Dossiers

(DID) on base metals,

PGE, REE diamonds,

etc.

Markets) and

TSX.

(iv) Publish DIDs by

2012

3. Develop policy

prescriptions and

enabling

environment to

develop the

mineral sector forbase, noble and

strategic metals

and diamonds to

the fullest.

(i) Create and utilize

institution to provide

attributable and non-

building techno-

economic policy advice

to Government andIndustry.

(ii) Development of metal-

specific policies

comprising extraction,

beneficiation, value

addition, conservation,

acquisition, raw material

security, recycling,

substitutes and

alternatives.

(iii) Creation of R&D

institutions under an

overarching framework

for coordinated work.

(iv) Activation of National

Mineral Advisory

Council as highest

policy making body of

the mineral sector.

(v) Develop and execute

strategies for achieving

raw material security for

important metals and

minerals and facilitate

metal and mineral

(i) Positioning of the

institutions by

2012.

(ii) By 2014.

(iii) By 2014.

(iv) By 2011.

(v) MoUs with mineral

rich countries and

preparation of

Country Dossiers

identifying


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industry in accessing

raw material assets

abroad.

opportunities.

4. Develop a distinct

Geoscientific rolefor the Ministry and

for GSI focusing

on fundamental,

multidisciplinary

and societal

scientific issues.

(i) Position GSI as centre

for specialized andmultidisciplinary

geosciences and HR

development for

deployment across

sector.

(ii) Develop geoscientific

partnerships with State

Governments, Central

institutions, including

offshore research andglobal change issues.

(iii) Create multi-Ministry

National Geoscience

Council to lay down

geosciences policy

directions andcoordinate.

(i) Implementation of

HPC Report.

(ii) Conversion of

Central

Geological

Programming

Board (CGPB)into National

Geoscientific

Programming

Board (NGPB).

(iii) Creation of

Council.

5. Reposition the

Ministry from a

regulatory role to

a techno-

economic,

scientific and

facilitatory role.

(i) Generate techno-

economic policy papers

and provide fora for

discussions.

(ii) Forge relationships with

Industry associations for

metals, mining

technologies, equipment

technologies,

exploration

technologies.

(iii) Facilitate Industry in

(i) Identify develop

and fund

institutions.

Ongoing, starting

2011.

(ii) Create Business

Development

Plans for each

area.

(iii) Get into MoUs,

prepare Country


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8. LINKAGE BETWEEN THE STRATEGIC PLAN AND RFD

The RFD for the ministry can be derived from the implementation plan and

timelines described above.

9. CROSS DEPARTMENTAL AND CROSS FUNCTIONAL ISSUES

The success of the effort will depend upon a co-ordinated effort across the

agencies of the ministry of mines, states and other stakeholders. Definition

of forums for these interactions is one of the eight strategic priorities

identified by the ministry. After defining these forums then focus will be on

accessing technology

assets abroad.

(iv) Hold and facilitate

holding of and

participation in

workshops, Seminars,

Explorations, Trade

Shows, etc. to facilitate

policy making and

Industry.

specific Dossiers

on opportunities,

participate in

events, create

G2G environment

and facilitate B2Gopportunities for

Indian business.

(iv) Coordinate the

participation of

Ministries

concerned and

Industry in global

events includingPDAC, Indaba,

Mining Congess

in China,

Australia and

Singapore.

Organise annual

shows in India

through CII and

FIMI.


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to start implementing priorities with in next five years. The process will

be made pragmatic by leveraging the existing forums of other ministries.

10. MONITORING AND REVIEWING ARRANGEMENTS

While we will detail the mechanism for monitoring the external processes

and internal initiatives, we expect these to follow three principles:

Create transparency by tracking progress through a well defined MIS

and making it visible to all stakeholders. Various stakeholders should

also be able to update this

Review the progress and de-bottleneck at the agreed interaction forum,

including a review by the Honorable minister

Documents

India Mining Strategic Plan 2011