Mining industry faces a confidence crisis. At the same time, capacity is up, dividend yield are up and commodity prices have fallen, but not crashed.
Mining plays an important role in Indian industry. It is a prominent economic activity which contributes significantly to the Indian economy. The GDP contribution of the mining industry varies from 2.2 to 2.5 per cent only but going by the GDP of the total industrial sector it contributes around 10 to 11 per cent. The mining sector has the potential to contribute up to INR 11.25 trillion to the GDP by 2025, said Dinsha Patel, Mines Minister.
Deprived confidence in Mining industry is owing to the factors such as cost controls, return on capital and commodity prices are of utmost concern for industry leaders. Moreover, the mining industry has recently stopped outperforming the broader equity markets; mining stocks fell nearly 20 per cent in the beginning of 2013.
Major challenges in Indian Mining sector
- Financing and managing major projects
- Mining transactions and industry consolidation
- Increasing productivity
- Improving operational effectiveness
- Managing risk
- Complying with regulatory & reporting requirements
- Addressing sustainability issues
- Recruiting and retaining a skilled workforce
- Improving infrastructural facilities
- Integrating updated mining technology
- Increasing flows of foreign direct investment
Apart from aforementioned issues, mining business in India would continue to be uncertain and face problems in 2013-14. This is because of uncertainty in regulatory matters, down trend in global commodity prices and the Mines and Minerals Development & Regulation (MMDR) Bill not being in place, according to sources.
Mining industry is considered as an ancient industry. Despite its old-age roots, exploration & exploitation of natural resources have always been among most active fields for renewal through innovation.