Policy intervention will give fillip to nascent heavy mineral industry: V V Mineral

Written by FE Online | New Delhi | Updated: Oct 18 2014, 21:47pm hrs
In India, there is a demand-supply mismatch for heavy minerals, which are used for critical applications in diverse industries (electronics, ceramics, paints, paper, pigments, plastics, pharmaceuticals, aerospace, defence, etc.). Unlike other major minerals that are fully exhausted after mining, heavy mineral sands are replenishable as only about 20% is recovered as minerals, while the balance 80% sand is backfilled into the mined area. But the Heavy Minerals Mining (HMM) industry is in a very nascent stage. In an interaction with Financialexpress.com, V Subramanian, Director, VV Mineral, said the government needs to come up with a coherent policy that will give fillip to this nascent industry. Excerpts:

Q. Give us a brief overview of the heavy minerals market in India Why it is a nascent industry

Heavy Minerals Mining (HMM) industry comprises mainly of ilmenite, zircon, rutile, garnet, and sillimanite is nascent in India. These minerals also include ones with high specific gravity, such as titanium and rare earths found only in Odisha, Andhra Pradesh, Kerala, Maharashtra and Tamil Nadu. Unlike other major minerals that are fully exhausted after mining, heavy mineral sands are replenishable as only about 20% is recovered as minerals, while the balance 80% sand is backfilled into the mined area.

Used for critical applications in diverse industries (electronics, ceramics, paints, paper, pigments, plastics, pharmaceuticals, aerospace, defence, etc.) they are also termed strategic minerals. Given these facts, the Atomic Energy Regulatory Board strictly regulates the HMM industry and in 1998 only this sector was opened up to the private players.

There is a demand-supply mismatch as we are unable to exploit our mineral wealth in a sustainable manner. For example, although India holds 35% of global ilmenite reserves (more than 500 million tonnes), annual production is only about 800,000 lakh tonnes. Similarly, India has 71% of world monazite reserves, but regulatory caps prevent high production.

India imports most of its requirements, which depletes forex reserves. Although India possesses the Worlds largest reserves of Heavy Mineral sands [~ 25- 28%], yet its exploitation is dismally low {~5- 6%}. USA, Australia and S. Africa having only about 11 -12% reserves each, have >25% share in the exploitation of the beach mineral sands.

We need to come up with a coherent policy that will give impetus to this nascent industry so that self-sustainability is achieved through less export duty and technology transfer for processing the heavy minerals.

Q. Why are heavy minerals very important for Indian economy

HMM recovers minerals from the sand, which primarily comprise ilmenite, zircon, rutile, monazite, garnet, and sillimanite. Heavy minerals also include those with high specific gravity found within mineral sands, such as titanium and rare earths. With critical applications in many industries such as electronics, ceramics, pigments, paints, paper, plastics, pharmaceuticals, aerospace and defence they are also called strategic minerals and are important for our economy as it finds its applications everywhere.

The sector is regulated by the Atomic Energy Regulatory Board and private companies are barred from mining monazite which is the primary source of radioactive thorium. As a strategic mineral, thorium is critical for Indias nuclear power program.

Q. What is your annual output of heavy minerals each year in India

Last year during FY 13-14, we have exported close to 7,00,000 tonnes of heavy minerals and to the value of 800 crores approximately. The company has earmarked a modest target of Rs 850 crore in FY 2014-15 owing to the slow market and Indian economic conditions.

Q.Comment on the key trends in the Garnet and Ilmenite sector.

Ilmenite, a heavy mineral, is the basic mineral to produce titanium and titanium dioxide pigments which are critical in the production of paints, paper and plastic and finds applications in aircraft manufacturing. India has one of the largest reserves of Ilmenite in the world but its production is woeful 8,00,000 tonnes annually. Likewise, Titanium metal is also used in aerospace and defence, while Garnet is used in water filtration, water-jet cutting, surface preparation, sand blasting and other applications. Garnet is an eco-friendly mineral and is meant of 100% exports. The demand globally is 10 lakhs tonnes and India exports around 6.5 lakhs tonnes.

What about TiO2 market in India Where does it find its value

The most important value added product derived from Ilmenite is Titanium Dioxide. It is a strategic mineral which has its varied applications in aerospace, paint, automobile, defence, ceramics, tiles & refractory. VV Mineral produces 15000 tonnes of TiO2 annually.

Q. What would be the entry barriers and key challenges in the Heavy Minerals Mining sector

High export duty on Ilmenite to start with, makes us very uncompetitive in international market. No other country has imposed export duty on Ilmenite

Lack of port infrastructure. Most of the mineral operations are in Tamil Nadu, Kerala and Andhra Pradesh. We dont have port thats deeper than 11 13 meters. This makes us ship in small ships, making the freight more expensive. Proximity of the mineral sands deposits to the ports are also an issue as this raises the transportation cost substantially

Lack of sufficient power, which again makes our own captive generation using diesel generators very expensive, almost thrice the cost of Grid power

In terms of mining:

* Abnormal delay in getting approvals for Mineral Concession

* Delay in getting mining plan approval / Scheme Approval from Indian Bureau of Mines as well as Atomic Minerals Directorate

* Delay in getting CRZ Clearance from Govt., of India, Ministry of Environment and Forest

* Delay in getting Environmental Clearance from Ministry of Environment and Forest

In terms of Processing:

* Laws framed by the government to protect coastal Processing units actually have not taken the interest of the beach mineral industry into account

One of the stipulations is that processing units cannot be set in the coastal areas coming under the CRZ. This leads to putting up plants far away from the mining areas which increases the transportation expenses as the remnant sand has to be brought back to the mining site for refilling

Mines Act declares that the Factory Act will not be applicable to mining industry, but we are forced to abide by the factory act rules also as most of the government officials are not aware of the mining act. So unnecessarily the industry is forced to implement the clauses of Factory act also which increases the overhead costs

Government allowed private participation in the Heavy Minerals Mining industry in the year 1998, only after realizing the fact that India holds 35% of the world reserve but contributes not more than 0.5% of the world production. Now the situation has definitely improved after private players have been allowed in this industry. We contribute almost close of 5% of the world production. Challenges remain to this industry in the form of lack of infrastructure, export duty and problems in obtaining mining leases. But given a slight attention from Government, we can easily surpass countries like Australia and South Africa and contribute more than 50% of the worlds production. Our Indian reserves are huge and average % of heavy mineral is one of the highest that can be found anywhere else in the world and yes, we have an enormous growth potential.

Q. What are the opportunities in the Heavy Minerals Mining sector

The Heavy Mineral Mining industry has enormous potential which could yield nearly Rs 30,000 crore in annual turnover to the exchequer. Indias GDP has grown steadily since Independence because it is backed by robust growth in the production of minerals such as iron ore, coal, copper, zinc, aluminium, magnesium, limestone, etc. Worldwide, mining is akin to oxygen for the manufacturing industry. Without mining, manufacturing would soon collapse like a pack of loose cards. To boost Indias GDP and make inclusive growth a reality, mining needs to grow in a big way and hurdles cleared in the mineral supply of industry.

Q. Do you think that the present policy is affecting the growth of this industry Kindly elaborate.

First, our antiquated laws (MMDR Act of 1957 and MCR of 1960) have the door firmly shut on private investment in prospecting. These minerals are so unique and the rules are very general and not specific to this industry.

Second, single window clearance for the mining industry is required as it takes a total number of 28 ministries and departments at state and central government levels, leading to a total gestation time of more than 2800 days (nearly 8 years) severely impacting the industry.

Thirdly, the government must provide export Incentives to this sector as it has imposed 10% duty on processed Ilmenite and 5% on unprocessed Ilmenite which makes it India uncompetitive with global counterparts.

Fourthly, restrictive Import policy i.e., Anti-dumping duty on Tio2, Rutile and Zircon should be done away with.

Fifthly, we need simplification of MOEF (Ministry of Environment & Forest) clearance as well as CRZ clearance for heavy minerals mining or fix a particular time frame for granting the approval.

Lastly, there is not a single large scale world class independent mine operating in free market conditions in India. Ironically, the fallout of the restrictions that India has sought to impose on the extraction of natural resources has only resulted in rampant unregulated growth in mining, with the public sector, captive miners and SMEs often indulging in irresponsible and unscientific mining. Such mining has in turn damaged the environment and raised the hackles of indigenous people. Moreover, the misconceptions about sand mining often confused with beach minerals mining needs to be removed and this nascent industry must be given a policy level fillip.