Next week, from November 16 to 19, India’s flagship summit for the mining industry, the Global Mining Summit will take place in Kolkata. Delegates from India and the rest of the world will gather physically for the first time since 2018 to discuss big ideas and grand plans for India’s natural resources sector. What makes the Summit particularly significant this time is that, unlike other recent editions, this one will take place in a radically altered global scenario.
Since the last physical edition in 2018, there has been a once-in-a-century pandemic, a major war in Europe with global spillover, and an acceleration of climate change resulting in the manifestation of several major disasters in different corners of the world. The world is resetting. So is India. Mining and metals will be a central part of the new geopolitics, geoeconomics, and India’s own economic strategy and growth trajectory.
For India, this is a moment of great opportunity. The world is looking at a China-plus-one strategy for major global supply chains in manufacturing. The risk of just one country being the center of manufacturing supply chains has been evident since the onset of Covid. It has been made more acute by China’s zero-Covid policy, leading to major disruptions. Every manufacturing supply chain begins with raw materials, particularly minerals and then metals. If India aspires to raise the share of manufacturing in its GDP from around 16% to 25% in the next five years, it will require a huge increase in the supply of minerals and metals. Currently, we are importing significant amounts of copper, aluminium, and even coal, which are basic requirements of most industries. For new-age minerals like nickel, lithium, and cobalt, we are 100% import-dependent.
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That brings us to the second major new global trend after China-plus-one—the world is moving from an economy that was fossil-fuel-intensive to one that is going to be mineral-intensive. For many countries, this has been accelerated by the fallout on oil prices from the Russia-Ukraine war. The emerging technologies which are aiding a decarbonisation of the global economy, whether for renewable energy infrastructure or electric vehicles, are highly-mineral intensive in the sense that they require a quantum increase in the use of minerals (some old, like aluminium and copper, and some new like lithium, nickel, and cobalt) in their manufacture and operations. Onshore wind infrastructure is nine times more mineral intensive than traditional power plants. Electric vehicles are five to six times more mineral-intensive than internal combustion engine vehicles. As the demand for these grows, so does the demand for minerals. Currently, most of the new-age minerals are highly concentrated in some geographies, which is a risk.
The government of India, led by prime minister Narendra Modi, has actually been very quick to note these trends and respond. The call for self-reliance or atmanirbharta came early during the pandemic directly from the PM. Subsequently, policies in many sectors have been changed or introduced to help achieve this goal. The PLI schemes and schemes for semiconductors and display fab are a hallmark and benchmark. But there is a greater goal to atmanirbharta than just reducing import dependence. It is also a quest to put India on a sustained path to the world’s fastest-growing economy as well as to create productive jobs for the majority of the population. It also seeks to address regional imbalances in India so that all regions share prosperity.
The mining sector is well-positioned to be a partner for the government in achieving all those goals. Currently, mining contributes only 2% to India’s GDP. This can easily go up to 6%, given our geological potential. Hence, the sector can be a big contributor to growth. Research has also shown that mining is one of the most employment-intensive sectors in India, second only after construction. It is also well-known that India’s maximum geological potential is in the east of the country, which is also the region that usually trails in economic indicators. Mining can be the anchor sector that leads these states to converge with India’s richer states. Needless to say, if mining grows, India’s import bill will also fall significantly.
The government must seize the opportunity that this sector presents by further deregulating it. It must also speed up environment and forest clearances so that project implementation can happen faster. It must create an environment where foreign investment flows into this sector and bring more technology and capital. We must use the Global Mining Summit’s platform to make this sector the centerpiece of India’s future growth. It will also serve the interests of the rest of the world on climate and diversification of supply chains.
The author is Group CEO, Vedanta, and chairman, CII National Committee of Mining