Trade Analytics

Go Back

Panel prepares blueprint for doubling mineral output growth

Livemint:  September 20, 2016

New Delhi: Mineral production in India needs to grow 15% a year by volume to meet mines minister Piyush Goyal’s goal of raising the share of mining in the country’s economic output by one percentage point in the next two-to-three years, according to a blueprint being finalized by the government.

Mining output grew 9% in 2015-16 and 10.6% in the April-July period of 2016-17, according to official estimates.

To boost growth, the ministry is set to revive operations in several hundred mines as per a plan being prepared by a committee chaired by mines secretary Balvinder Kumar.

The panel has met once and will meet again in a fortnight after identifying the steps to be taken in the case of each of the mines to be revived. “We have to take several steps to achieve the target. Besides stepping up exploration, we have to restart operations in all mines that are not operational due to various reasons,” Kumar said in an interview.

Operations have been stalled at hundreds of mines due to problems relating to environment clearances, state-level approvals and delays in execution of lease deeds.

The mines ministry will have to coordinate its efforts with the coal ministry—also held by Goyal—as the mining and quarrying growth figures brought out by the ministry of statistics as part of GDP (gross domestic product) data include coal, petroleum and natural gas, in addition to minerals.

The petroleum and natural gas ministry, under minister Dharmendra Pradhan, has set a target of lowering import dependence on hydrocarbons through higher domestic production. Goyal’s idea is to raise the share of the mining and quarrying industry in gross value addition (GVA) in the economy by one percentage point from 2.4% at present. Minerals alone account for only 0.43% of GVA.

One of the steps the mining ministry plans to take is execute the lease deeds of about 70-80 mines for which approvals were granted before 12 January 2015, when the Mines and Minerals (Development and Regulation) Amendment Act of 2015 came into operation.

The execution of these mining lease deeds under the new law has a deadline of 11 January 2017, said Kumar. In addition, about 100 mines are likely to be auctioned shortly.

Even as the government is trying to raise output, uncertainty prevails over a recovery in commodity prices. Despite the impressive double-digit growth in mineral production in the first four months of this fiscal, growth by value contracted 7.2%.

Production of iron ore, used in the steel industry and accounting for the largest share in the output of metallic minerals, grew 32.4% in the April-July period of this fiscal from a year ago, but recorded a 6% contraction in value.

Experts said a recovery in mineral prices will depend on demand from user industries, which appears unlikely to pick up in the next 12 months.

According to Kameswara Rao, leader of energy utilities and mining at PricewaterhouseCoopers in India, demand for minerals is derived entirely from user industries, and in India, the value is dominated by fuel minerals and iron ore where offtake and pricing is low. Lower prices are a concern for countries that export minerals, but for a consuming country like India, volume of output is more important than value, he said.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.