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Over 80 bt of mineral reserves still untapped in India: ASSOCHAM  

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Posted on 20 Jun 2014

Last updated 28 Jun 2014 00:00:00 +0530

  Mining, untapped mineral, ASSOCHAM, India

Indian miners urgently need to improve operational efficiency as issues like over-extraction of minerals, illegal possession of land for mining have become major concerns in this sector, which if not addressed suitably can draw this flourishing sector backward.

HNF Correspondent

 

As the domestic mining sector has been waiting for exploitation of its full potential despite a huge resource base and geological advantages, primarily because of myriad interconnected infrastructure, social and regulatory bottlenecks, over 80 billion tons of India’s mineral reserves still remain to be tapped, reveals a recent ASSOCHAM study on India’s mining sector.

“With its substantial reserves of natural resources, India needs to embark upon sustainable best practices in mining to get best results in the sector. Besides, strict enforcement of mining laws is also imperative as better enforcement rather than more regulation can help remedy the ills plaguing Indian mining sector,” marked the study conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) on ‘Restoring Normal Operations in Mining.’

“Though the domestic mining sector holds huge growth potential in India’s economy, the sector is currently saddled with various economic, bureaucratic, environmental and capacity issues,” said Rana Kapoor, President of ASSOCHAM while releasing the chamber’s study.

“With China ramping up its domestic production, India faces a stiff competition as it seems very difficult for it to match the scale and cost of production with that of its counterpart,” Kapoor said adding that “Though it is not possible to predict commodity demand or price movements owing to the volatile nature of the industry, Indian players need to keep in mind various scenarios while preparing mine development plans.”

“As Indian players expand their operations (domestic or global), they should explore strategies to build portfolios (either by themselves or through strategic joint ventures/consolidation), synergies of which could be leveraged to match demand/supply imbalances,” he added.

“There is an urgent need for improving operational efficiency of mining companies in India as issues like over-extraction of minerals, illegal possession of land for mining have become major concerns in this sector, which if not addressed suitably can draw this flourishing sector backward,” said Kapoor mentioning further that “There is also the need to formulate a public policy in mining which would enable inclusive sustainable development by sharing the benefits derived from mineral resources with the community at large as it would positively affect the growth outlook of the sector.”

In its study, ASSOCHAM has also mentioned about the need to correct regulatory anomalies in order to build an environment conducive for commercially viable mining. Besides, it is also crucial for stakeholders to understand global trends and likely implications so as to evolve a growth oriented approach.

It is also imperative for domestic mining players to explore internal factors that could help in reducing costs in a sustainable manner such as improving productivity, strengthening management and reporting systems, using analytics to uncover underlying cost drivers, rationalizing supply chains and others, further noted the study.

Mining companies also need to explore adoption of innovative strategies such as automation, investment in transport/logistics, increasing use of technology in mine designing, sharing of infrastructure and other resources, the study report said.

Considering that many Indian players are facing hindrances in carrying out mining activities owing to infrastructural constraints and procedural delays resulting in capital blockage, ASSOCHAM study has suggested to focus on developing skill sets - both internal and external - to grow their capital project portfolios in a strategic manner (phased development, diversification, use of new technologies) and put proper financing arrangements into place to prevent financial impairment in the event of project delays.

In the wake of local economic, social and environmental effects of mining activities, it is imperative for Indian companies to integrate risk-based corporate social responsibility (CSR) strategies and develop/track the same with same diligence as being used to track production. “Until CSR is considered a direct business risk, mining companies are to struggle to minimise the probability and financial impacts of these risks,” suggested the ASSOCHAM study.

The study also marked that mining companies are facing dearth of talent in executive positions which is likely to widen as we go ahead, while suggesting, “Mining companies require new talent management strategies, besides miners should standardize systems, embrace new training environments and take necessary steps to attract both skilled management and tech-savvy directors.”

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