India Mining Report Q1 2012
Includes 3 FREE quarterly updates
India hosts a wide range of globally significant mineral resources, including four fuel minerals (such as coal and uranium), 11 metallic minerals (such as iron), 22 minor minerals and 52 non-metallic minerals (such as clay). The country ranks among the world's top five nations for its core competency commodity reserves of coal and iron ore. Iron ore reserves are estimated in the region of 23bnt (bn tonnes) and account for 6% of global reserves, while coal reserves are reported to be around 255bnt. India is the world's third-largest producer of coal, fourth-largest producer of iron ore and the fifth-largest producer of bauxite. However, only 10% of the country's landmass has been explored due primarily to significant regulation and bureaucratic obstacles.
India's mining industry looks set to post average annual growth of 5.1% in real terms from 2011 to 2015 to reach US$79.6bn at the end of the period, as output of key minerals looks set to grow in the coming years. However, growth in 2012 and beyond will continue to be curtailed by India's poor operating environment. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals such as coal and iron ore in a bid to meet fast-rising domestic demand.
India's regulatory environment is prohibitive for investors although recently proposed legislation is a step in the right direction. In the past, mining permits/licences are issued contingent on success in the reconnaissance phase. This practice exposes firms to high levels of risk. However, the proposed 2011 Mines and Minerals Development and Regulation (MMDR) Bill allows for the granting of nonexclusive reconnaissance licences and high-technology reconnaissance/exploration licences based on ability and intention to develop an area. The new bill also calls for a system for bidding licences, which can create a market for these licences, increasing transparency. A negative for the proposed MMDR Bill will be the additional taxes to be levied for community development.
India's mining sector is highly stratified. There are a number of giant, mostly state-owned mines that have an outsized effect on total output and at the same time there are a large number of small and inefficient mines, many of them illegal. According to Austrade, 5% of operating mines in India produce about 50% of the country's mineral output. Given the sector's strategic and economic importance, there is significant government involvement, with the sector dominated by state-owned companies or Public Sector Undertakings (PSUs) such as National Aluminium Corp (NALCO), SAIL, National Mineral Development Corp (NMDC) and Coal India. Indeed, according to the United States Geological Survey, PSUs contribute about 85% of India's total value of mineral production and are the main producers of key commodities such as coal, iron ore, aluminium, copper and gold.
India hosts a wide range of globally significant mineral resources, including four fuel minerals (such as coal and uranium), 11 metallic minerals (such as iron), 22 minor minerals and 52 non-metallic minerals (such as clay). The country ranks among the world's top five nations for its core competency commodity reserves of coal and iron ore. Iron ore reserves are estimated in the region of 23bnt (bn tonnes) and account for 6% of global reserves, while coal reserves are reported to be around 255bnt. India is the world's third-largest producer of coal, fourth-largest producer of iron ore and the fifth-largest producer of bauxite. However, only 10% of the country's landmass has been explored due primarily to significant regulation and bureaucratic obstacles.
India's mining industry looks set to post average annual growth of 5.1% in real terms from 2011 to 2015 to reach US$79.6bn at the end of the period, as output of key minerals looks set to grow in the coming years. However, growth in 2012 and beyond will continue to be curtailed by India's poor operating environment. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals such as coal and iron ore in a bid to meet fast-rising domestic demand.
India's regulatory environment is prohibitive for investors although recently proposed legislation is a step in the right direction. In the past, mining permits/licences are issued contingent on success in the reconnaissance phase. This practice exposes firms to high levels of risk. However, the proposed 2011 Mines and Minerals Development and Regulation (MMDR) Bill allows for the granting of nonexclusive reconnaissance licences and high-technology reconnaissance/exploration licences based on ability and intention to develop an area. The new bill also calls for a system for bidding licences, which can create a market for these licences, increasing transparency. A negative for the proposed MMDR Bill will be the additional taxes to be levied for community development.
India's mining sector is highly stratified. There are a number of giant, mostly state-owned mines that have an outsized effect on total output and at the same time there are a large number of small and inefficient mines, many of them illegal. According to Austrade, 5% of operating mines in India produce about 50% of the country's mineral output. Given the sector's strategic and economic importance, there is significant government involvement, with the sector dominated by state-owned companies or Public Sector Undertakings (PSUs) such as National Aluminium Corp (NALCO), SAIL, National Mineral Development Corp (NMDC) and Coal India. Indeed, according to the United States Geological Survey, PSUs contribute about 85% of India's total value of mineral production and are the main producers of key commodities such as coal, iron ore, aluminium, copper and gold.
Contents
Executive SummarySWOTS
India Political SWOT
India Economic SWOT
India Business Environment SWOT
Global Mining Outlook
Table: Recent Tax Increases
Table: Largest Coal Projects
Table: Frontier Mining Projects
Industry Trends And Developments
Table: India's Mining Sector – Value And Production, 2008-2015
Business Environment
Mining Business Environment Ratings
Table: Asia Mining Business Environment Ratings
India’s Business Environment
Table: BMI’s Business And Operation Risk Ratings
Table: BMI’s Legal Framework Rating
Table: Labour Force Quality
Table: Annual Foreign Direct Investment Into Asia, 2006-2008
Table: BMI’s Trade And Investment Ratings
Table: India’s Top Export Destinations, 2003-2009 (US$mn)
Political Outlook
Industry Forecasts Scenario
Lead
Table: Major Projects
Table: India’s Lead Production, 2008-2015
Zinc
Table: Major Projects And Key Expansion Plans
Table: India’s Zinc Production, 2008-2015
Uranium
Table: India’s Uranium Production, 2008-2015
Coal
Table: India’s Coal Production 2008-2015
Bauxite
Table: India's Bauxite Production, 2008-2015
Iron Ore
Table: Key Iron Ore Expansion Plans
Table: India's Iron Ore Production, 2008-2015
Regulatory Development
Table: Key Changes In Licence/Lease Granting In The 2011 MMDR
Table: Current Royalty Rates And Changes Of Proposed Mining Bill
Competitive Landscape
Company Profiles
Hindustan Copper
Vedanta Resources
Coal India
NMDC
Commodity Strategy – Metals Update
Gold
Copper
Aluminium
Lead
Nickel
Tin
Zinc
Global Assumptions
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% y-o-y)
Table: Selected Developed Market Exchange Rates, 2010-2013 (average)
Table: Selected Emerging Market Exchange Rates, 2010-2013 (average)
Developed States
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Emerging Markets
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% y-o-y)
Consensus
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)
Business Environment Ratings Methodology
Table: Mining Business Environment Indicators
Table: Weighting Of Components Skip to top