Mines and Minerals Development and Regulation (MMDR) Act 1957
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MINING SECTOR REPORT :::: April – 2012
INDUSTRY STATISTICS for (BSE Metal Index) Conglomerates’ (all data in Rs. Cr. Except per share data)
No Company FV Equity Networth Net Sales PAT Book
Value
RONW
(%)
D/E
Ratio
Price
17.04.2012
P/E
Ratio
P/BV Dividend
Yield -%
1 SAIL 10 41,304 370,695 426,871 49,047 89.75 13.94 0.520 96.10 9.53 1.07 2.50
2 Tata Steel 10 9,594 469,452 293,964 68,657 487.45 16.36 0.640 461.55 6.55 0.94 2.57
3 Hindalco Ind 1 1,915 297,005 236,269 21,369 155.10 7.42 0.240 128.00 10.63 0.83 1.17
4 JSW Steel 10 2,842 169,462 231,632 20,107 577.75 15.04 0.87 750.45 6.35 1.02 1.63
5 Sterlite Ind 1 3,361 232,289 152,888 14,197 69.11 6.24 0.240 108.40 31.24 1.57 1.01
6 NMDC 1 3,965 192,145 113,689 64,992 48.46 38.82 - 169.10 8.68 3.49 1.95
7 Hindustan Zinc 2 8,451 225,332 99,121 49,005 53.33 24.11 - 125.55 8.97 2.35 0.80
8 Jindal Steel & Power 1 934 86,893 95,546 20,641 92.98 26.75 1.33 507.40 22.86 5.46 0.30
9 Sesa Goa 1 869 115,888 82,490 34,328 133.34 36.52 0.150 190.05 7.37 1.43 1.91
10 Bhushan Steel 2 425 58,277 69,677 10,051 274.44 20.47 2.83 395.00 8.55 1.44 0.13
11 Coal India 10 63,164 178,160 4,644 46,961 28.21 28.12 0.080 350.05 26.86 12.41 1.11
Source: Capitaline
KEY POINTS:
The mining industry in India is momentous for its economic development. The sector makes available raw materials to other basic industries like Auto, Power, Infrastructure, construction etc. and also contributes to India’s exports. Not only that, it also provides an employment opportunities. It has a strong multiplier effect on the rest of the economy as each penny engendered from it generates 2.4 times the direct and indirect output in the economy. States like Jharkhand, Orissa and Chhattisgarh are especially dependent on mining for their economic development.
The input of mining and quarrying sector to GDP for the year 2010-11 was ~2.26% (Source: Central Statistical Organisation).
India ranks among the globe's apex 10 nations for its core competency commodity reserves of coal and iron ore. In 2009-10 in world production India was second in barytes, chromite and talc/steatite/ pyrophillite, third in coal & lignite and bauxite, fourth in iron ore and kyanite/sillimanite, fifth in manganese ore, steel (crude) and zinc, fifth in bauxite, eighth in aluminium and tenth in magnesite.
The industry has the potential for elevated growth and attracting investment to the exploratory stage of mining. Soaring long-term demand from the steel industry is expected to boost iron ore industry whereas positive trends in power sector will propel demand for coal. Key drivers for growth will include booming construction, automobiles and power industries which are expected to support the Mining sector. With the general consent is moving towards higher mechanization & technologies, increased participation of private sector, increased productivity and less state interference to nourish and grow this sector.
QUICK NUMBERS:
In terms of volume, India’s mineral production grew at a CAGR of 4.88% during the period
2007-2011 and is predict to grow at a CAGR of 7.90% during the period 2012-2016.
The total value of mineral production (excluding atomic minerals) during 2010-11 was
2,00,609.38 crore.
Foreign Direct Investment up to 100% is permissible for exploration of all non-fuel and non-
atomic minerals.
The number of mines which reported mineral production (excluding minor minerals,
petroleum (crude), natural gas and atomic minerals) in India was 2628 in 2010-11.
410
47
3
23
Fuel Metallic Non Metallic Atomic Minor Minerals
INDIA PRODUCES 87 MINERALS
METALIC
Ferrous
Non Ferrous
NON METALIC
Mineral Fuels
Precious Stones
Others
MINING INDUSTRY:
Minerals are precious natural resources that are finite and non-renewable. It forms the primary raw materials for numerous basic
industries hence; minerals constitute the back-bone of economic growth of any nation. The past of mineral extraction in the country
dates back to the days of the Harappan civilization. The distribution of minerals in the country is scatter and mineral density varies
from region to region.
India ranks among the globe's apex 5 nations for its core competency commodity reserves of coal and iron ore. The metallic
production is accounted for by iron-ore, copper-ore, chromite and/or zinc concentrates, gold, manganese ore, bauxite, lead
concentrates. Amongst the non-metallic minerals, more than 90 percent of the aggregate value is shared by limestone, magnesite,
dolomite, barytes, kaolin, gypsum, apatite & phosphorite, steatite and fluorite. The hunt for minerals did not remain only on the
land mass alone but extended to off-shore areas and deep seas. Large reserves of oil were discovered in the off-shore areas and
their exploitation opened up new and exciting vistas in the oil sector thereby conserving huge foreign exchange reserves. In the
Indian Ocean, India has explored successfully the presence of poly metallic nodules lying on the ocean floor at a depth exceeding
3000 metres which bear metals such as copper, cobalt, nickel, manganese, etc. The Eastern States−Jharkhand, Chhattisgarh, Orissa
and Southern States− Andhra Pradesh, Karnataka−as well as Rajasthan in Western India are the most important mineral-rich regions
in the country. The total mineral potential area in India covers 5.75 lakh sq. kms, of which only 75,000 sq. kms. area has been
explored in detail so far.
Mineral deposits are valuable natural resources which are very crucial
raw material for infrastructure, capital goods and basic industries. As a
major resource for development the extraction and management of
minerals has to be integrated into the overall strategy of the country’s
economic development. The exploitation of minerals has to be guided
by long-term national goals and perspectives. India's mining sector is
highly stratified. There are a number of giant, mostly state-owned
mines that have a great effect on entire production and in unison there
are a bulky number of small and unproductive mines, many of them
unlawful. 5% of operating mines in India produce about 50% of the
nation's mineral output. Given the sector's strategic and economic
significance, there is noteworthy government involvement, with the
segment 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.
India is gifted with huge resources and reserves of metallic and
non-metallic minerals, which made it very advantageous for the
growth and development of the mining sector in India. Mining
sector is one of the very essential segments of our economy.
India produces as many as 87 minerals, which include 4 fuel, 10
metallic, 47 non-metallic, 3 atomic and 23 minor minerals
(including building and other materials).
Source: Ministry of Mines Annual Report 2010-11
TRENDS IN VALUE OF MINERAL PRODUCTION, EXPORTS & IMPORTS
The Trend of Index of Mineral Production for the Last 5 Years (Base 1993-94 = 100)
Source: Ministry of Mines Annual Report 2010-11
Source: Ministry of Mines Annual Report 2010-11
Source: Ministry of Mines Annual Report 2010-11
VALUE OF MINERAL PRODUCTION BY GROUPS
MINERAL PRODUCTION
Based on the overall trend so far the index of mineral production
(base 1993-94=100) for the year 2010-11 is estimated to be
208.83 as compared to 193.36 for 2009-10 showing a positive
growth of 7.43%.
The total value of mineral production (excluding atomic minerals) during
2010-11 has been estimated at 2,00,609.38 crore, which shows an increase
of about 11.83% over that of the previous year. During 2010- 11, estimated
value for fuel minerals accounts for `1,35,243.81 crore or 67.42%, metallic
minerals, `41828.44 crore or 20.85% of the total value and nonmetallic
minerals including minor minerals `23537.13 crore or 11.73% of the total
value.
MINES OWNERSHIP:
In the federal structure of India, the State
(provincial) Governments are the owners of
minerals located within the periphery of the
State concerned. The Central Government is
the owner of the minerals underlying the
ocean within the territorial waters or the
Exclusive Economic Zone of India.
The State Governments grant the mineral concessions for all the minerals located within the boundary of the State, under provisions
of the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960. For minerals specified in
the First Schedule to the Mines and Minerals (Development and Regulation) Act, 1957, before granting the mineral concession,
approval of the Central Government is necessary. Also, the Central Government notifies certain minerals as ‘minor’ minerals from
time to time for which the absolute powers for deciding on procedures of seeking applications for and granting mineral concessions,
fixing rates of royalty, dead rent and power to revise orders rest only with the State Government.
POLICY FOR FOREIGN DIRECT INVESTMENT IN THE MINING SECTOR
Ever since the elocution of the National Mineral Policy, 1993, India has made excellent progress in pulling of foreign investment in
the sector, with attractive incentives. The National Mineral Policy was revised in 1994 and as a result, private investment (both
domestic and foreign), has been permitted for the exploration and exploitation of the following minerals: Iron – ore, Copper,
Manganese, Lead, Chrome ore, Zinc, Sulphur, Molybdenum, Gold, Tungsten ore, Diamond, Nickel and Platinum group of metals.
2628
574 608
1446
2999
574700
1725
3150
574719
1857
All Minerals* Coal (including Lignite)
Metallic Minerals Non-Metallic Minerals
NUMBER OF REPORTING MINES
2010-11 2009-10 2008-09
Gujarat6%
Andhra Pradesh9%
Jharkhand6%
Madhya Pradesh
5%
Rajasthan8%
Karnataka4%
Orissa10%
Goa4%
Assam4%
Chhattisgarh8%
Remaining10%
Offshore26%
SHARE OF STATES IN VALUE OF MINERAL PRODUCTION 2010-11(estimated)
Gujarat14%
Andhra Pradesh
14%
Jharkhand11%
Madhya Pradesh
10%Rajasthan
8%
Karnataka8%
Orissa6%
Tamilnadu6%
Maharashtra6%
Chhattisgarh5%
West Bengal4%
Remaining8%
NUMBER OF MINES - STATEWISE (FY2010-11)
Public Sector74%
Private Sector26%
PRODUCTION CONTRIBUTION 2009-10
Source: Ministry of Mines Annual Report 2010-11
Source: Ministry of Mines Annual Report 2010-11
The entrepreneurs wishing to bring foreign direct investment in the non-fuel and non-atomic mineral mining sector are entitled to
bring in the foreign equity just by informing the Reserve Bank of India, termed as ‘Automatic Approval’. Automatic approval of
foreign direct investment up to 100% is permissible for exploitation of all non-fuel and non-atomic minerals. For being eligible to
obtain a mineral concession in India, a transnational/ foreign Company will be required to incorporate and register as an Indian
company under Section 3(1) of Companies Act, 1956. There is absolutely no bar to the extent of foreign holding in such a company,
as long as it is registered in India. The Indian company can thereafter apply for mineral concessions to the State (Provincial)
Government concerned.
GROSS DOMESTIC PRODUCT FROM MINING & QUARRYING SECTOR
The Gross Domestic Product (GDP) accrued from mining and quarrying sector at 2004-05 prices is estimated by Central Statistical
Organisation (CSO). The advance estimates of GDP (at 2004-05 prices) for the year 2010-11 in respect of mining and quarrying sector
accounted for about 2.26% of GDP. The contribution of mining and quarrying sector to GDP for the year 2010-11 is estimated at
`1,10,482 crore which would indicate an increase of 6.2% over that in the previous year.
Indian mining sector is exemplified by a large
number of infinitesimal operational mines. The
number of mines which reported mineral
production (excluding minor minerals, petroleum
(crude), natural gas and atomic minerals) in India
was 2628 in 2010-11 as against 2999 in the
previous year. The sector is highly stratified.
There are a number of giant, mostly state-owned
mines that have a great effect on entire output
and at the same time there are a huge number of
undersized and ineffective mines, many of them
illegal.
During 2009-10, the Public Sector continued to play a dominant role in mineral
production accounting for 74.48% or `1,19,385.86 crore in the total value. Small
mines, which were mostly in the private sector, continued to be operated manually
either as proprietary or partnership ventures. India's ranking in 2009-10 in world
production was second in barytes, chromite and talc/steatite/ pyrophillite, third in
coal & lignite and bauxite, fourth in iron ore and kyanite/sillimanite, fifth in
manganese ore, steel (crude) and zinc, sixth in bauxite, eighth in aluminium and tenth
in magnesite.
COST ADVANTAGE
•Lower Labor and convesion cost specially in the production of Steel and Aluminium
•India is strategically located for exports.
BOOSTING GOVT. POLICIES
•100% FDI is granted by the Indian government under the automatic route for mining of metal ores, including precious metals and minerals.
•Govt. is promoting investments in the sector
PROFUSE RAW MATERIAL
•India is rich in mineral resources and has large reserves of primary metal ores such as iron ore, bauxite, chromium, manganese & titanium.
•24 billion tonnes of iron ore reserves —the fifth-largest reserve base in the world
•2.4 billion tonnes of bauxite reserves —the fourth-largest global reserve base
•240 million tonnes of manganese reserves —the second-largest reserve base worldwide
•57 million tonnes of chromium reserves —the third-largest reserve base in the world
-
10.00
20.00
30.00
40.00
50.00
60.00
70.00
80.00
90.00
2004 2005 2006 2007 2008
US
$ B
n.
SIZE OF METAL AND MINNING SECTORMARKET OVERVIEW
The sector was valued at 3,835.4 billion in 2008, recording a year-on-year
growth rate of 32.7% and a compound annual growth rate of 22.9% from
2004 to 2008.
Note: Here it is assumed that, the metals and mining sector comprises of the
aluminium segment (only production of primary aluminum is considered), the base
metals segment (consisting of lead, zinc, copper, nickel and tin), the coal segment
(consisting of primary coal —anthracite, bituminous and lignite), the iron and steel
segment (consisting of production of crude steel, pig iron and direct reduced iron),
and the precious metals and minerals segment (consisting of gold, silver, platinum,
palladium, rhodium, and industrial and gem-quality diamonds).
MINING ADVANTAGE TO INDIA
SWOT ANALYSIS:
STRENGTHS:
Government Support:
The government offers an extensive array of concessions to investors in India, engaged in mining activity. Few are as
follows,
Mining in specified backward districts is eligible for a complete tax holiday for a period of 5 years from
commencement of production and a 30% tax holiday for 5 years thereafter.
Environment protection equipment, pollution control equipment, energy saving equipment and certain other
equipment eligible for 100 percent depreciation.
Source: Metals & Mining in India, November 2009
One tenth of the expenditure on prospecting or extracting or production of certain minerals during five years
ending with the first year of commercial production is allowed as a deduction from the total income.
Export profits from specified minerals and ores are eligible for certain concessions under the Income tax Act.
Minerals in their finished form exempt from excise duty.
Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron, unwrought aluminium.
Large quantity of high quality reserves: India is the largest producer of mica; third largest producer of coal and lignite &
barytes; ranks among the top producers of iron ore, bauxite, manganese ore and aluminium.
Easily availability of Labors at low labor and conversion costs.
Strategic location: Propinquity to the developed European markets and fast-developing Asian markets for export of
Steel, Aluminium
WEAKNESS:
Poor employee productivity: The output per miner per annum in India varies from 150 to 2,650 tonnes compared to an
average of around 12,000 tonnes in the U.S. and Australia.
Un-skilled and inexperienced Labor force
Mining Techniques is divided into two types: surface mining and underground mining. In India opencast mining is being
preferred by manufacturers over underground mining which has led to land degradation, environmental pollution and
reduced quality of coal as it tends to get mixed with other matter
There is no complete solution to deal with the fly ash generated at coal power stations. Clean coal technologies, such
as Integrated Gasification Combined Cycle, where the coal is converted to gas, are available, but these are expensive
and need modification to suit Indian coal specifications.
Poor infrastructure facilities and obsolete Mining technologies
High rate of accidents
Lack of R&D programs and training and development, low innovation capabilities
There is limited access to capital, and mines are becoming ever more costly to discover, obtain, develop and produce.
Less operational efficiency compared to global peers. Mining costs of Indian companies are at least 35 percent higher
than those of leading countries such as Australia, Indonesia, and South Africa. To match productivity, our miners need
to invest in innovative technologies, improve processes in planning and execution of projects, and risk management
framework.
High rate of illegal mining
OPPORTUNITIES
India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited. The investment gap likely to be
covered by the private sector. India welcomes joint ventures between foreign and domestic partners to mobilise
finances and technology and secure access to global markets.
Potential areas for exploration ventures include gold, diamond, copper, lead, zinc, nickel, cobalt, molybdenum, lithium,
tin, tungsten, silver, platinum group of metals and other rare metals, chromite and manganese ore, and fertiliser
minerals.
Considerable potential exists for setting up manufacturing units for value added products.
There exists considerable opportunities for future discoveries of sub-surface deposits with the application of modern
techniques. Current economic mining practices are generally limited to depths of 300 meters and 25 percent of the
reserves of the country are beyond this depth
Strengthening of logistics for Minerals distribution - In India, the logistics infrastructure such as ports and railways are
overstrained and expensive and act as bottlenecks in development. In addition, capacity addition by the Indian
Railways is necessary to increase freight capacity from the producing regions to demand centers in the northern and
central parts of the country.
Focusing on technology for future like tighter emission standards and development of inexpensive clean technologies
THREATS:
Elevated rate of accidents and poor productivity due to unskilled and inexperienced manpower
Negligible importance given to the environmental concerns
High rate of illegal mining
The extended lead times and bureaucracy associated with permits, concession, investment projects and company
registration
PRODUCTION TRENDS:
The value of metallic
minerals in 2009-10 at
32,274.29 crore
decreased by about
10.52% over the
previous year. Among
the principal metallic
minerals, iron ore
contributed 26864.84
crore, 83.24%.
METALLIC MINERALS AND ITS COMPONENTS (2009-10)
Iron ore 26,864.84 83.24%
Zinc concentrate 1,290.85 4.00%
Manganese ore 1,269.54 3.93%
Chromite 1,183.41 3.67%
Bauxite 456.36 1.41%
Copper (concentrate) 362.54 1.12%
Silver 338.84 1.05%
Gold 331.39 1.03%
Lead concentrates & tin concentrates 176.52 0.55%
Total 32,274.29 100%
27%
63%
Public Sector Private Sector
Source: United States Geological Survey
IRON ORE:
Iron is the most commonly used metal globally. It is one of the
prominent components in making steel, representing almost 95% of all
metal used per year. It is used primarily in structural engineering
applications and in maritime purposes, automobiles, and general
industrial applications (machinery). The production of iron ore was
218.64 million tones in 2009-10, which registered an increase of 2.67%
over the previous year. As shown in the chart, about 27% of the total
production was shared by Public Sector Companies like SAIL (including
IISCO), NMDC, etc. The pie of Private Sector is 63%.
Mining iron ore is a high volume low margin business, as the value of
iron is significantly lower than base metals. It is highly capital intensive, and requires significant investment in infrastructure. For
these reasons, iron ore production is concentrated in the hands of a small number of players. Regionally, nearly the entire
production of iron ore (96%) accrued from Orissa, Karnataka, Chhattisgarh, Goa and Jharkhand during the year. The remaining 4%
production was reported from Andhra Pradesh, Madhya Pradesh, Maharashtra and Rajasthan.
COPPER:
Copper is an elastic metal with high thermal and electrical conductivity. It is used as a conductor of heat and electricity, a building
material, and a constituent of various metal alloys. The key applications of copper are in electrical wires (60%), roofing and plumbing
and industrial machinery. Copper is a vital metal being used in areas such as defence, space programme, railways, power cables,
mint, Telecommunication Cables, etc. The production of copper concentrate was at 124 thousand tonnes in 2009-10 which got
decreased by about 9.48% as compared to the previous year. Copper consumption in a country is an indicator of its stage of
economic development. Per capita consumption of copper in India is in the order of 0.50 Kg as compared to 10 Kg in developed
nations.
Presently, the demand for copper is met by two major sources viz. Copper ore mined from indigenous mines and imported
concentrates. The indigenous mining activity among the primary copper producers is limited to only Hindustan Copper Limited. The
other primary copper producers in the private sector import the required mineral in the form of concentrate. However, the scenario
is being changing drastically after coming of the other two primary producers of Copper in private sector namely M/s Hindalco Ind.
Ltd. and M/s. Sterlite Industries, Jagadia Copper, Continuous Cast Rod plants of M/s TDT and M/s Finolex. The capacity for
production of primary copper in India has risen from a mere 47,500 tonnes per year till 1997 to 9,99,500 tonnes at present, resultant
to which India is now a net exporter of refined copper.
CHROMITE:
Chromite is used as a refractory material as it has
high heat solidity. As shown in the chart India ranks
second in Chromite production globally. The
production of chromite was at 3.41 million tonnes in
2009-10 which got decreased by 16.22% as
compared to the previous year. Orissa reported
almost entire output of chromite (99%) in the
country. A nominal production was reported from
Karnataka.
SAIL, IISCO,
NMDC etc…
Tata Steel, Essel Minning,
Sesa Goa etc…
44%
18% 16%5% 4% 4% 2% 7%
South Africa India Kazakhstan Zimbabwe Finland Iran Brazil ROW
Chromite largest producers across the world
18%
82%
Public Sector Private Sector
Source: World Gold Council
Mining of chromite is majorly dominated by private sector producers
namely, Tata Steel, IMFAL, Balasore Alloys Ltd., Jindal Strips and FACOR.
Three Public Sector Companies; viz, Orissa Mining Corporation (OMC),
Mysore Mineral Ltd. (MML) and Industrial Development Corp. of Orissa
Ltd. IDCOL) together reported 18% of the total production in 2009-10.
MANGANESE:
Manganese phosphating is used as a treatment for oxidation and deterioration
prevention on steel. Manganese makes up about 1000 ppm (0.1%) of the
Earth's crust, making it the 12th most abundant element. Land-based resources
are large but irregularly distributed. About 80% of the known world manganese
resources are found in South Africa; other important manganese deposits are in
Ukraine, Australia, India, China, Gabon and Brazil. Manganese is essential to
iron and steel & Aluminium production. The production of manganese ore at
2.44 million tonnes in 2009-10 decreased by about 12.52% compared to that in
the previous year. As shown in the chart, MOIL continued is the largest
producer of manganese ore with a share of 42% of the total production in
2009-10 followed by Tata Steel (10%). Regionally, of the total production of
manganese ore in 2009-10, Orissa contributed 25%, Maharashtra 24%, Madhya
Pradesh 25%, Karnataka 13% and Andhra Pradesh 10%. The remaining 2% was
jointly shared by Goa, Gujarat, Rajasthan and Jharkhand.
GOLD:
Gold is considered valuable and highly preferred precious metal for coinage, jewelry, and other arts since long. Gold standards have
been the most universal base for monetary policies. Besides monetary function gold has other uses in dentistry, electronics & other
fields. Out of the total world resources of gold, 15 to 20 % was obtained as a by-product during extraction of other metals. South
Africa and China are the source for a large proportion of the world's gold supply, with about 50% of all gold ever produced having
OMC, MML and
IDCOL
Tata Steel, IMFAL, Balasore
Alloys, Jindal Strips & FACOR
MOIL42%
Tata Steel10%
SMIOR10%
OMC9%
R.B.S.S.D5%
Others24%
Manganese Producers
India933
China811
US195
Germany159
Turkey144 Switzerland
116
Thailand109
Vietnam100
Russia75 Saudi Arabia
72
Top 10 Gold Consumption countries (in Tons) (2011) .....India ranks first
Source: Tradingeconomics-Comex
come from South Africa. As shown in the chart, India is world's largest consumer of gold, as Indians buy about 800 tonnes of gold
every year, mostly for jewelry. India is also the largest importer of gold. Indian households hold approximately 18,000 tonnes of gold
which represents 11 per cent of the global stock.
In 2009 – 10, India produced 2106 kg
(excluding by-product gold recovery from
imported concentrates) primary gold,
registered decrease of about 13.62% as
compared to the previous year. Karnataka
was the leading producer of gold accounting
for 99% of the total production. The
remaining production was reported from
Jharkhand.
The world’s top five producing gold mining
companies include: Barrick Gold, Goldcorp,
AngloGold Ashanti, Newmont Mining
Corporation and Kinross Gold Corporation. The only gold producing mine in India is Hutti Gold Mines Limited (HGML). It has reserves
of approximately 600 tons and produces on an average 3 tons of gold a year. International gold price have touched a historical high
of 1900.65 dollars in September of 2011 and a record low of 34.90 dollars in January of 1970.
BAUXITE:
Bauxite is an aluminium ore and is the main source of aluminium. In 2007, Australia was one of the top producers of bauxite with
almost one-third of the world's production, followed by China, Brazil, Guinea, and India.
In FY 09-10The production of bauxite in India stood at 13.95 million tonnes, a decrease by 9.76% compared to the previous year. The
four foremost companies; namely, NALCO, HINDALCO, BALCO and Bombay Minerals Limited engaged in bauxite mining in the
country, jointly contributed 66% of the total production of bauxite in 2009-10. State wise, Orissa accounted for 35% of the total
output of bauxite during 2009- 10 followed by Gujarat (19%), Maharashtra (14%) Chhattisgarh (12%) and Jharkhand (12%).
LEAD CONCENTRATE
During FY 2009-10, the production of lead concentrate was 136 thousand tonnes risen by 1.74% and that of zinc concentrate at 1277
thousand tonnes reported an increase of 4.33% over the previous year. Rajasthan accounted for the entire production of lead
concentrate and zinc concentrate during 2009-10.
NON-METALLIC MINERALS
The value of production of non-
metallic minerals at Rs.4286.94
crores during 2009-10 increased
by 5.41% as compared to the
previous year. As shown in the pie
chart, Limestone is a leading
contributor with 69.66% of the
total value pie of non-metallic
minerals in 2009-10.
Limestone70%
phosphate7%
barytes5%
dolomite3%
gypsum2%garnet
2%kaolin
2%
talc/soapstone/steatite1%magnesite
1%
Silica Sand1%
non-metallic minerals6%
Non-Metallic Minerals
International gold prices for past 10yrs (April-02 to April-12)
LIMESTONE:
Limestone is used as building material, as aggregate to form the base of roads, as white pigment or filler in products such as
toothpaste or paints, and as a chemical feedstock. The production of limestone was 229 MT in 2009-10, an increase by 3.33% as
compared to previous year. Limestone is widely produced in India. State wise distribution; as much as 87% of the total output in
2009-10 was contributed by seven principal States namely Andhra Pradesh (22%), Rajasthan (20%), Madhya Pradesh (12%), Gujarat
(9%), and Tamil Nadu, Chhattisgarh and Karnataka (8% each). The remaining 13% of the total production was shared by other
limestone producing States.
About 41% of the total production was reported by 15 private sector companies. Some of them are Grasim Industries Ltd. (9%). The
Associated Cement Cos. Ltd.(7%), Ultra Tech Cement Ltd. (6%), India Cement Ltd., (5%), Shree Cement Ltd. (5%) and Birla
Corporation Ltd., Madras Cement Ltd. and Binani (3% each).
PHOSPHORITE/ROCK PHOSPHATE
Phosphate rock is used for the manufacturing of fertilizer, animal feed supplements and as industrial chemicals. For the FY 2009-10,
production of phosphorite/rock phosphate stood at 1547 thousand tonnes decreased by 14.26% compared to the previous year. The
entire production was from Public Sector. Jhamarkotra mine of Rajasthan State Mines & Minerals Limited (RSMML) alone accounted
for 88% of the total production. Madhya Pradesh contributed the remaining 12% of the production.
DOLOMITE:
Dolomite is used as an ornamental stone, as a source of magnesium oxide and in
the Pidgeon process for the production of magnesium. Dolomite is also used as
the substrate in marine aquariums. Its production stood at 5182 thousand tonnes
in 2009-10, which got decreased by 5.85% compared to the preceding year. Four
major companies together accounted for 55% of the dolomite produced in 2009-
10 as shown in the chart. The chief States which produce dolomite were Andhra
Pradesh (30%), Chhattisgarh (23%), and Orissa (18%). The remaining 29% was
contributed by Seven States during the year, namely, Gujarat, Jharkhand,
Karnataka, Madhya Pradesh, Maharashtra, Uttarakhand and Rajasthan.
KAOLIN
Kaolin is used in ceramics, medicine, coated paper, as a food additive in toothpaste, in light bulbs and in cosmetics. It is also used in
paint; in rubber, in adhesives and in the production of paper. The production of kaolin in 2009-10 was 2578
thousand tonnes which got increased by 23.73% as compared to that in the previous year. Around 50% of total output was reported
from Gujarat followed by Kerala (28%) and Rajasthan (13%).
59%41%
Public Sector Private Sector
0%
2%
4%
6%
8%
Grasim Ind
Ultra Tech
India Cement
Shree Cement
Birla Corp Madras Cement
Binani
26%
12%9% 8%
45%
SAIL Rashtriya Ispat Nigam
South West Mining
Tata Steel Others
MAJOR DOLOMITE PRODUCING COMPANIES
Source: Coal India Limited
GYPSUM
Production of gypsum at 3.42 million tones in 2009-10 registered a decrease of 11.73% as compared to the previous year. By and
large, the entire production of gypsum was reported from Rajasthan (99%). The remaining 1% was from Jammu & Kashmir and
Gujarat. Two Public Sector Companies namely,RSMML and Fertilizer Corporation of India Ltd. accounted for almost the entire
production.
MAGNESITE
The production of magnesite was at 286 thousand tonnes during 2009-10 increased by 13.25% as compared to the previous year.
TALC/SOAPSTONE/STEATITE
The production of talc/soapstone/steatite in 2009-10 which was at 835 thousand tonnes got decreased by about 6% over the
previous year. Rajasthan, the principal State accounted for 74% of the total production in 2009-10. Five principal producers in
Rajasthan; namely, Associated Soapstone Distributing Co. (P) Ltd. (28%), Udaipur Mineral Development Syndicate (P) Ltd. (22%),
Parbatia Mines (3%) Nalwaya Mineral Industries Pvt. Ltd. (5%) and Katiyar Mining
and Industrial Corp. (4%) together accounted for 62% of the total production of talc/ soapstone/ steatite in 2009-10.
MINOR MINERALS
The value of production of minor minerals was estimated at 18734.45 crore in 2009-10. Andhra Pradesh has a share of 54% in the
value of minor minerals. Rajasthan was at second place and had a share of 16.6% in the value of minor minerals. Next in the order
was Uttar Pradesh with a share of 12.4%, Kerala 3.9%, Gujarat 3.8%, Madhya Pradesh 2.4%, Maharashtra 1.7% and Chattisgarh 1.2%.
ALUMINUM:
Aluminium is the most copious metal in the earths crust. It ranks second, next to
steel, in terms of volumes used due to its versatility. It is highly resistant to most
forms of corrosion, is non-magnetic, non-combustible, non-toxic and impervious
(hence used in the food and packaging industries) which is also a good conductor of
electricity. It is used in construction, transport- auto, aerospace, rail and marine
industries, packaging-protection, electrical uses, medicine-antacid, machineries and
Equipments and Castings of utensils. In India the electrical sector is the largest
consumer of aluminium. India has a 3.5% of the Aluminium share of the total global
production. The global aluminium production was 419.88 lakh tonnes in 2010. India
produced 15.24 lakh tonnes in 2009-10. The primary aluminium industry in India
consists of five producers viz. National Aluminium Company Limited (NALCO), HINDALCO Industries Limited, Bharat Aluminium
Company Limited (BALCO), Madras Aluminium Company Limited (MALCO) and Vedanta Aluminium Limited (VAL). Out of these
Companies, only NALCO is in the Public Sector. The price of aluminium fixed by the primary producers is generally aligned to the
London Metal Exchange (LME) prices. Global aluminium capacity for the 2010 is approximately 50.30 million tonnes, while
production was 41.9 million tones, which indicates a capacity utilization of around 80% in 2010 compared to 75% in 2009.
COAL
The Indian coal industry is the world’s third largest in terms of
production and fourth largest in terms of reserves. As shown in
the chart, Indian energy demand is largely met by coal. About
70% of the total coal produced is used for electricity generation
and the remaining by the steel, cement and other heavy
industries. Coal is also used as fuel for domestic purposes. The
Domestic76%
Export24%
Aluminium Sales
2% 2%9%
36%
51%
Hydro Nuclear Natural Gas oil Coal
% SHARE of PRIMARY ENERGY RESOURCES
Source: Coal India Limited
Coking13%
Non Coking
87%
coal reserves of India up to the depth of 1200 meters have been estimated by the Geological Survey of India at 276.81 billion tonnes
in January 2010. Coal deposits are chiefly located in Jharkhand, Orissa, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra Pradesh
and Maharashtra. The Lignite reserve has been estimated at around 39.90 billion tonnes for Mar-2010. The major deposits of Lignite
reserves are located in the state of Tamilnadu.
Features of Indian coal Deposits:
1. Limited reserves of coking coal
2. High ash and low calorific values
3. Divergence in location of deposits and Major consumption centres
4. High cost of transport
5. Coal mining was nationalised between 1971 & 1973. Coal India was formed as PSU in Nov 1975.
Major Players
Coal India Limited: A public sector undertaking with 390 mines, it
controls 88% of the domestic coal production.
Singerani Collieries Company: It operates through a network of 50
mines.
Minerals and Metals Trading Corp: It is responsible for the conversion
of imported coal into coke for metallurgical and industrial purposes.
Key Issues of India Coal Industry:
Despite having one of the largest reserves, the Indian coal industry does not hold a position in the league of global energy
suppliers. This can be attributed to the soaring domestic demand.
To meet this requirement, substantial public investment is needed. Even the private players would need to deploy
advanced mechanisms to increase production levels.
Coal washeries are also under pressure. The onus of producing quality coal lies with this segment. It is required to sustain
high quality levels within stringent environment regulations.
Excessive government regulation continues to be a major concern for the Indian coal industry. The existing legislative
framework restricts the private sector in the establishment of coal washeries and regulated mining for specific industries,
such as power and fertilizer units.
Pit Head Price43%
Royalty/Cess/Sales
Tax13%
Transportation44%
LANDED PRICE OF COAL
MINERAL RESERVE SCENARIO IN INDIA AND WORLD
CONTRIBUTION AND RANK OF INDIA IN WORLD PRODUCTION OF PRINCIPAL MINERALS AND METALS
Commodity Unit of Quantity World Prod India Prod Contribution % India's Rank
Mineral Fuels
Coal and Lignite million tonnes 6938 566 8.1 3rd
Petroleum (crude) million tonnes 3714 33.6 0.9 25th
Metallic Minerals
Bauxite '000 tonnes 199000 14048 7.06 6th
Chromites '000 tonnes 18700 3372 18.0 2nd
Iron Ore million tonnes 2248 213 9.5 4th
Manganese Ore '000 tonnes 33400 2396 7.2 5th
Industrial Minerals
Barytes '000 tonnes 7100 2137 30.1 2nd
Magnesite '000 tonnes 24300 285 1.2 11th
Rock phosphate '000 tonnes 159000 1450 0.9 14th
Talc/Steatite/Pyrophyllite '000 tones 7400 1063 14.3 2nd
Mica tonne 300000 1243 0.34 15th
Metals
Aluminium '000 tonnes 36900 1302 3.5 7th
Copper (refined) '000 tonnes 18300 500 2.7 10th
Steel (crude) million tonnes 1224 63 5.1 3rd
Lead (refined) '000 tonnes 8900 197 2.2 10th
Zinc (slab) '000 tonnes 11400 658 5.7 3rd
Source: World Mineral Production 2005-2009, British Geological Survey *- Figures related to 2009.
Country Year 2009 Reserves
China 120,000 36,000,000
India* 2,700 3,100,000
Brazil 650 48,000
Malays 380 30,000
US - 13,000,000
Australia - 5,400,000
CIS – - 19,000,000
Other NA 22,000,000
Total 124,000 99,000,000
Source: Mineral Commodity Summaries, 2010
MAJOR PLAYERS IN THE MINING SECTOR
MINING SECTORS
MAJOR PLAYERS
Exploration and Production of Coal/Lignite Coal India Ltd.,
Neyveli Lignite Corporation
IISCO
Exploration of Metals National Aluminium Company Ltd. (NALCO)
Bharat Aluminium Company Ltd. (BALCO)
Mineral Exploration Corporation Ltd. (MECL)
Bharat Gold Mines Ltd.
Oil and Natural Gas Corporation Ltd. (ONGC)
Ircon
Hindustan Zinc Ltd.
Hindustan Copper Ltd. (HCL)
Sikkim Mining oration
Iron Ore Sector National Mineral Development Corporation (NDMC)
Kudremukh Iron Ore Company
Steel Authority of India Ltd. (SAIL)
Orissa Mining Corporation
Bauxite Mining and Aluminium Production National Aluminium Company Ltd. (NALCO)
Copper Ore Mining Hindustan Copper Ltd. (HCL)
Rock Phosphate and Barytes Mining
Rajasthan State Mines and Minerals Ltd.
Andhra Pradesh Mining Development Corporation
GLOBAL MINING COMPANIES OPERATING IN INDIA MOUs IN THE FIELD OF GEOLOGY & MINERAL RESOURCES
MOU with Chile
MOU with Nambia
MOU with Ontario
MOU with Mozambique
MOU with Malawi
Co-operation with Mongolia
Co-operation with Columbia
Co-operation with Afghanistan
Co-operation with Quebec Province, Canada
Transworld Garnet Co. Canada
Meridian Peak Resources Corpn Canada
Pebble Creek Resources Ltd. Canada
BHP Billiton Australia
Rio-Tinto Minerals Development Ltd. UK
Metdist Group UK
Phelps Dodge Exploration Corpn USA
De-Beers Consolidated Mines Ltd. South Africa
Anglo American Exploration (India) BV Netherlands
KEY GROWTH DRIVERS
The metals and mining sector is dependent on other sectors such as power, infrastructure, automobiles, etc., for end consumption,
and the growth of the sector is directly dependent on the growth of these end-user segments.
Power sector
The power sector accounts for a large share of the consumption of aluminium and coal in the country.
The Electricity Act 2003, the National Electricity Policy and the National Tariff Policy have created a favorable business
environment for attracting investments in the power sector.
Focus on transmission and distribution (T&D) and opening up of the power sector to the private sector is expected to
notably increase power generation, transforming into amplified demand and more consumption of put in material such as
coal and aluminium.
Infrastructure sector
Our construction segment is measured to be the second largest in the nation after agriculture, employing approximately
14% of working population. There has been rising demand for construction bustle across all the segments including
infrastructure, real estate and industrial construction.
According to the census, the India’s housing scarcity was estimated at 25 million. Important infrastructure projects such as
bridges and urban construction, power projects, railways, airport modernization, real estate development, etc. provides
attractive business opportunities for steel manufacturers.
Automotive sector
India’s automotive sector is a major consumer of steel and aluminium. The constant growth in this sector is driving the
demand for both steel and aluminium. India is the world’s second-largest manufacturer of two wheelers and the fifth-
largest manufacturer of commercial vehicles. India is also among top five exporters among the Asian countries. The state’s
auto-component segment is well established, with more than 500 companies in the organized sector and about 10,000
firms in the unorganisedsector.
Cement sector
The cement sector in India is one of the major consumers of coal. The demand for cement is steadily increasing with the
rise in construction activity, thereby driving the demand for coal.
KEY ISSUES (RISKS) WITH INDIAN MINING INDUSTRY:
One of the tough concerns in India's mining sector is the lack of evaluation of nation’s natural resources. Various areas
remain unexplored and the mineral resources in these areas are yet to be assessed.
Issues related to Mining safety and ensured regulated mining
Large scale displacements, resistance of locals
Environmental matters like pollution, corruption, deforestation, dangers to animal habitats etc.
private sector participation needs to be increased
High risk and size of the capital required not available in India
The mining industry in India is momentous for its economic
development. The sector makes available raw materials to other basic
industries like Auto, Power, Infrastructure, construction etc. and also
contributes to India’s exports. Not only that, it also provides an
employment opportunities. It has a strong multiplier effect on the rest
of the economy as each penny engendered from it generates 2.4 times
the direct and indirect output in the economy. India is chiefly self-
sufficient in minerals which comprise key mineral raw materials to
industries like thermal power generation, iron & steel, ferro-alloys,
aluminium, cement, various types of refractories, chemicals like caustic
soda, soda ash, calcium carbide, etc. By and large, self-sufficient in
coal (with the exception of very low ash coking coal) and lignite among
mineral fuels, bauxite, chromite, iron, manganese ores, ilmenite and
rutile among metallic minerals. Despite high degree of self-sufficiency,
some quantities of rare minerals were imported to meet the demand
for either blending with locally available mineral raw materials and/or
for manufacturing special qualities of mineral-based products.
States like Jharkhand, Orissa and Chhattisgarh are especially dependent on mining for their economic development. However, the
mining industry in India is not able to apprehend its full potential; it contributes around 2% to the overall GDP. During FY04-09, while
the GDP in India grew at a CAGR of 8.5%, the mining industry registered a slower growth at 5.7%. The key cause is the low driving
force on exploration which accounts for less than 0.5% of the global exploration expenditure of USD 12.6 billion in 2008. However,
supported by low cost advantage, strategic location and an untapped mineral base, the industry has the potential for elevated
growth and attracting investment to the exploratory stage of mining. Soaring long-term demand from the steel industry is expected
to boost iron ore industry whereas positive trends in power sector will propel demand for coal. Key drivers for growth will include
booming construction, automobiles and power industries which are expected to support the Mining sector. With the general
consent is moving towards higher mechanization & technologies, increased participation of private sector, increased productivity
and less state interference to nourish and grow this sector.
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