Mining attracted interest of businessmen from the time of China boom. It has been indeed one of the most lucrative businesses and also sophisticated. With the recent turmoil in mining, we, at Steel 360 spoke to Loknath Rath, Director, Geovalve, which is one of the largest miner of Bhubaneswar mining activity & Scenario.
1. Mining industry in India has been negative for last few years as there are mining bans in Karnataka, Goa and some parts of Odisha. Where do you see road ahead for this industry in coming years?
We have too many cooks stewing the broth in the mining sector. The Centre, State & the Judiciary all have their own viewpoints, at times contrarian. The outdated policies & regulations need to be reviewed and complete transparency in mine allocation and renewals & operations need to be bought in. Lease cancellations, renewal issues, land allocation problem, environmental issues, CSR issues etc which have cropped up in the past has affected the mining investor’s confidence and has resulted in imports of mineral, which India has in abundance.
I am an optimist & feel that the current central government recognizes the issue being faced by the mining sector and has initiated steps to bring in policies, which will embrace transparency at all levels. However, it needs to hasten up the pace of reforms before the industry comes to a grinding halt and affects our economic growth.
I feel that in the interest of mineral conservation, scientific, ethical and optimized mining needs to be carried out. Focused mining companies, which have a history of successful operation, will be able to do justice to these principles.
The track record of the miner needs to be reviewed and then decision on further renewal can be granted with riders related to local consumption, value addition etc.
3. Government has talked about amendments in MMDR Act recently, what are these possible changes and will it help mining situation in India?
There are some changes in MMDR Act 1957 such as auction of mineral assets, additional taxes and others. Auction is a double edged sword. In case, the reserves are not proven with detailed exploration and interpolation, the mineable reserve could be much more or less depending on quality of exploration. The bidder would have to bear the risk. Also, in case the auction takes place in a bearish market, the price would be less than that one can get in a bullish market. There is also a possibility of the winning bidder trying to resort to selective mining in order to take out max value in least possible time. This would be detrimental to proper development of the resource.
The power to grant and extend mineral concession lies with the State government. For a few minerals, prior permission from Centre is required. However, we have seen that over the years, nearly 50,000 applications have piled up and the process is dysfunctional. The new proposed amendments need to streamline the process so that accountability for delays can be clearly established.
The mining industry is beset with too many levies like Royalty, Surface rent, Compensatory Afforestation, Forest Development Tax. The proposed bill adds additional levies like contribution to district mineral foundation (DMF), Central & State Cess, CSR, Relief & Rehabilitation and issuance of company shares to affected people. India has one of the highest taxes for the mining industry. This should be in line with the global standards.
4. Government is also talking on E-auctioning of bulk minerals like Iron ore; do you think this is the right solution?
Any solution which is transparent and objective would be readily acceptable. The design of auction terms, frequency of auction etc would be important in order to avoid too much volatility.
5. When do you see Karnataka ‘C’ grade mines coming for auction?
It is a tough call, as a number of legal & regulatory issues are attached to the process of auctioning Iron ore mines, which were considered as illegally operated. It has to take requisite approvals from Supreme Court and may require amending a few regulations. This will be a time consuming matter and may take months to finalize the process and operationalize it.