All eyes are on the events that are going to happen in the mining sector in the coming months. The draft Mines and Minerals (Development and Regulation) Bill, 2011, or MM&DR Bill, in the present form contains a few irritants for domestic steel and mining companies and the highest policy-deciding body has to consider these if the implementation of the Act is to facilitate adequate investment in the sector and bring in transparency in mining activities.
It is unfortunate that in the past one year or so, the mining sector in the country has earned lots of criticism due to unethical practices, flagrant violation of environmental and fiscal rules and regulations resulting in windfall profits for a handful few. The existing miners, other than NMDC, have not been able to earn a brand image for themselves. The proposed Bill attempts to plug the loopholes, but it must be pragmatic enough to address the issues of compensation to the displaced people in a manner so that it still remains viable for fresh investment to flow in.
Internal demand for iron ore and coal are abundant and would continue to outstrip supply, both in volume and grade. Investment in mining comprises funds for acquisition of mines for exploration, technology transfer for beneficiation, installation or hiring of handling equipment etc. Countries like Afganistan, Australia, Bolivia, Mozambique, Brazil, and Mongolia; all rich in mining resources are attracting investment from China, the United States and Russia. Indian entrepreneurs are also investing funds either individually or as a consortium to acquire mining sources in many of these countries. The governments in these countries are making it possible to attract investment without compromising the interests of the inhabitants. The enabling clause for investment in mining in these countries contains certain amount of value addition inside the country. The related question is what prevents India from becoming a mining hub in the near future. A big responsibility lies on the shoulder of all the stakeholders to pave the way for initiating an investment fury in the mining sector.
Mining has a weight age of 14.2% in the index of industrial production and has clocked a negative growth of 4.4% in the first eight months of the current fiscal. In 2010-11 industrial growth reached 8.2% with the mining sector clocking 5.2% growth. The sector has a very strong forward linkage with steel and power sectors and, the current slowdown in steel and blockage of fresh investment in power sector can be largely attributed to the supply bottlenecks arising out of the below-normal performance by the mining sector. Thus, sustaining the growth of mining sector at a sufficiently high level has become imperative for accelerating the growth of industrial production and would provide the missing link for the growth of the Indian economy.
The author is DG, Institute of Steel Growth and Development. The views expressed are personal