A Prescription To Revive The Mining Sector

-By Prof. Bharat B. Dhar, Sr. Vice-President, Ritn and Balved Education Foundation (RBEF).

Prof. Bharat B. Dhar

Prof. Bharat B. Dhar

The mining sector contributes significantly towards the economic development of any country and lays the foundation for manufacturing and infrastructural development. Blanket bans and delayed clearances have crippled the industry in the past few years. Impact of the sharp decline is reflected in the falling Investment and Industrial Production (IIP) growth rates. Over the past two years, output as measured by the index of IIP remained almost flat in 2013-14 and in fact declined 0.1 per cent. While iron ore demand is expected to reach 200Million Tonnes Per Annum (MPTA) by 2020, production has sharply declined in the past few years.

Policy Imperatives for the Mining Sector

Renewal of Lease
The clearance and approvals process is plagued by inefficiencies and delays. Various iron ore leases have been pending for renewal at the state level for a considerable period of time despite the fulfillment of all necessary conditions. Efforts to renew these leases on an urgent basis, by the concerned states, would help remove uncertainty and speculation.

Allocation of raw materials
India has now moved to an auction-based policy for allocation of captive coal, and similar policies are being contemplated for other minerals. While auctions may help maximise state revenue and ensure transparency, this route may lead to cartelisation and may overlook the principle of greater common good by hurting the growth of foundation industries such as steel, power and infrastructure.
Steel plants are heavily dependent on mines and make large investments not only in technology and other sustainable resource utilisation processes, but also in community development around the mines. These are long term investments that outgrow the lease periods and are vital for holistic and sustainable economic development. Thus, there is a need for a clear allocation policy that takes into account the interest of all parties, including those of the captive mines.

Forest and Environment Clearances
Forest and environmental clearances are imperative for mining operations but have become a root cause of inordinate delays in project execution. The new government has initiated an online portal to promote a time bound transparent process for clearances. However, there is further scope to introduce more efficiency. For instance within the mining sector, there is an opportunity to do away with the need for fresh forest and environmental clearances in order to obtain lease renewals for mines that have already obtained these clearances in the past and have been following the set rules and regulations.

Compensatory Afforestation
There is an urgent need to reduce the time frame for clearances in order to maintain the economic viability of projects. Identification and creation of land banks by the State for the compensatory afforestation land would substantially accelerate the clearance process and would also assist in the early commencement of plantation work by the Forest Department and prevent encroachments on the identified CA land during the transition period.

Utilisation of CAMPA Funds
The funds made available to the State CAMPA must be utilised for the development, maintenance and protection of forests and wildlife management. During the period only Rs.1,775.84 crore was spent by the State/UT, leaving Rs.1,149.81 crore unutilised.

Mineral Exploration and Policy
Impetus from the government for exploration has so far been limited to the coal sector, inviting private investment and seamless progression from Reconnaissance Permit (RP) to Prospecting License (PL) and finally to Mining Lease (ML) would help augment exploration in the iron ore sector.

Infrastructural Constraints
Mining operations require infrastructure development in and around remote locations where mineral reserves are located. Adequate infrastructure facilities are prerequisites to promoting the mining market. The government needs to incentivise development of infrastructure in mineral-bearing areas.

Way Forward
There is a need to identify mining as a strategic sector that is critical to ensure economic growth. A more enabling environment that permits long-term investment planning, would greatly benefit the sector. The new government has taken promising steps for awarding approval and clearances by introducing an online portal for some clearances as well as by reducing the number of factors used to determine forest land as forbidden for mining. However, there is a long road ahead to create a system across all departments and clearances that truly imbibes the spirit of transparency and efficiency. Additionally, greater private sector involvement in mineral exploration will introduce more capital and better technical knowledge that will greatly benefit the mining industry. The country’s mineral industry has developed good expertise in ‘Sustainable Framework’, it is therefore possible to expand the growth of mineral sector development in general and iron ore exploration in particular to be in-tune with sustainable development.

(Prof. Bharat B. Dhar is an expert on mining sector, having done a B.Sc. Mining Engineering degree from Banaras Hindu University, where he joined at an early age as a faculty. He subsequently enrolled in McGill University, Montreal, Canada, and obtained his Masters in Engineering and Ph.D. degree in 1970, which was followed by some period of Post-Doctoral fellowship. From 1970 to 1991, he held various prestigious positions at BHU including Professor and Head, Department of Mining, Institute of Technology and Chief Proctor etc. He has been actively involved in the decision making bodies of the country at various levels from time to time. He is a former President of Mining Geological and Metallurgical Institute (MGMI) FIMI, Hyderabad branch, Andhra Pradesh. He was a member of the Task Force on MoU, Ministry of Heavy Industries and Public Enterprises, Department of Public Enterprises, Government of India, with Mining and Metals Syndicate, for more than five years till December 2009. He has been a member of several committees of CSIR, Ministry of Mines and other governmental organisations. He is presently is Sr. Vice-President, Ritn and Balved Education Foundation (RBEF), the Sponsoring Body of Amity Universities and Director, Directorate of Research and Innovation Coordination, Amity University-Uttar Pradesh, NCR, New Delhi. Dhar has published over 120 scientific and technical paper and edited five books, including the Indian edition of UNDP Training Manual on Environment Management of Mine Sites.)

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