We need to mine in India to Make in India

08 Aug 2018

Mining in India has to be guided by perspectives based on minerals security and sustainable development

Mine in India to make in India
The paper by Mr Kumar suggests that auctioning of mineral resources not only increases input costs to industry, and increases the risk of mining as a venture, but also disincentivises investments in exploration.

The India Mining Summit 2018, organised by The Associated Chambers of Commerce & Industry of India (ASSOCHAM India), was held on 20th July in New Delhi with TERI as knowledge partner. On the occasion, Mr S Vijay Kumar, Distinguished Fellow, TERI, chaired Business Session - I and presented a policy paper on the summit's theme, 'Mine in India to Make in India'.

The paper suggests that "Auctioning of mineral resources not only increases input costs to industry, it increases the risk of mining as a venture, since many metal prices are prone to volatility and fluctuation and cyclicity.... When mines are auctioned for captive purposes, barriers to resource use efficiency are increased since it makes it difficult for new metal-based industries to enter the market with new technologies. It also reduces the scope and incentive for innovation in process R&D to extract by-product metals which occur along with the auctioned major minerals.

The policy of auction of mines in India has discouraged private investments into exploration, since the incentive for private investment in exploration (i.e the mining rights) is no longer there. Exploration with all its uncertainties is too high-risk an activity for government to deploy public funds on a large scale. This is particularly true of the new-age metals: Technology Metals, Energy Critical Metals and Rare Earths whose exploitation may not only require exploration at deeper depths of the earth's surface, but also substantial R&D in devising extraction processes. It must be understood that globally it is the "exploration" horse that pulls the 'mining" cart and not the other way around. Auction of mines as a process is not conducive to incentivizing exploration, and hence to pulling the engine of growth of the economy."

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