Mrp Mining

8/10/2019 Mrp Mining

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Mining Industry in India - An overview

Minerals constitute the back-bone of economic growth of any nation and India has

been eminently endowed with this gift of nature. There are many evidence thatexploitation of minerals like coal, iron-ore, copper, lead-zinc has been going on in the

country from time immemorial. However, the first recorded history of mining in

India dates back to 1774 when an English Company was granted permission by the

East India Company for mining coal in Raniganj. M/s John Taylor & Sons Ltd.

started gold mining in Kolar Gold Fields in the year 1880. The first oil well was

drilled in Digboi in the year 1866 - just seven years after the first ever oil well was

drilled anywhere in the world viz. in Pennsylvania State, USA in 1859. Mining

activities in the country however remained primitive in nature and modest in scale

uptill the beginning of the current century. Thereafter, with progressive

industrialisation the demand for and hence the production of various minerals

gradually went up. After India became independent, the growth of mining under the

impact of successive Five Year Plans has been very fast. There are ambitious plans

in coal, metalliferous and oil sectors to increase production of minerals during the

8th Five Year Plan and thereafter.

Coal: Deposits & Exploration

Indias major workable coal deposits occur in two distinct stratigraphic horizons -

Permian, commonly known as "Gondwana" coals and the Tertiary. About 99% of the

countrys coal resources are found within a great succession of fresh water sediments.

The major coalfields are represented by isolated basins which occur along prominent

present day river valleys, viz., Damodar, Koel, Sone-Mahanadi, Pench-Kanhan,

Pranhita-Godavari. Nearly 50 coalfields, varying in size from a few km2to as much as

1500 km2 are known today, barring the small and lenticular occurrences of coal along

the Himalayan foothills.

Coals of practically all ranks occur in India except peat and anthracite. The share of

lignite, however, is insignificant as compared to sub-bituminous and bituminous coal.

Indian bituminous coals are broadly divided into two categories, coking and non-

coking.


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Coal exploration in India even today is largely being carried out by conventional

methods of systematic geological mapping followed by drilling, core drilling playing

a dominant role. However, in the recent times modern exploration techniques like

photo-geology, remote sensing, non-coring drilling, geophysical surveys etc. are being

increasingly used for detailed and precise exploration.

Coal Reserves

The total coal reserves of the country have been estimated from time to time.

*Proved Reserves: In this case, the reserves are estimated from dimensions revealed

in outcrops, trenches, mine workings and boreholes and the extension of the same for

reasonable distance not exceeding 200m on geological evidence. Where little or no

exploratory work has been done, and where the outcrop exceeds one km in length,another line drawn roughly 200m in from outcrop will define a block of coal that may

be regarded as proved on the basis of geological evidence.

* Indicated Reserves: In the case of indicated reserves, the points of observation are

1,000 m apart, but may be 2,000 m for beds of known geological continuity . Thus a

line drawn 1,000 to 2,000 m from an outcrop will demarcate the block of coal to be

regarded as indicated.

*Inferred reserves : This refers to coal for which quantitative estimates are basedlargely on broad knowledge of the geological character of the bed, but for which there

are no measurements. The estimates are based on an assumed continuity for which

there is geological evidence, and more than 1,000 to 2,000 m from the outcrop.

Statewise and depthwise Coal reserves are given in the following table,

In Million Tonnes

State 0-300m 300-600m 600-1200m TotalWest Bengal 11999 8933 4191 25123

Bihar 40079 17626 6666 64371

Madhya Pradesh 32638 7433 14 40085*

Maharashtra 4590 1686 - 6276

Orissa 35015 11167 37 46219

Andhra Pradesh 5245 3876 1717 10838


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North Eastern Region 710 155 - 865

Total 130276 50876 12625 193777

Percentage 67 26 7 100

* includes 1062 Million. Tonnes in UP

The following table gives the Statewise reserves indicating different categories,

State Proved Indicated Inferred Total Percentage

of totalreserve

West Bengal 10590 10867 3666 25123 13

Bihar 28993 28801 6579 64373 33

Madhya Pradesh 9387 20480 9156 39023 20

Uttar Pradesh 662 400 - 1062 1

Maharashtra 3170 1179 1927 6276 3

Orissa 5714 22120 18384 46218 24

Andhra Pradesh 6079 916 3843 10838 5

North EasternRegion

257 149 458 864 1

Total 64852 84912 44012 193777 100

Percentage 33 44 23 100

Thus, Indias total coal resources now stand at a level of a little over 194 billion

tonnes in coal seams of thickness 0.9m and above and upto a depth of 1200m. This is

a little over 1% of the global coal resources. Of the total coal reserves of 194 billion

tonnes, 85% is of non-coking variety and only 15% is of coking variety. Further, 33%

of the reserves fall under Proved category 44% in the Indicated category and 23%

in the Inferred category. The coal occurring between 600m and 1200m depths,

which may be economically tapped for development in future, may be grouped as

"Resources" and the rest as "Reserves".

Lignite Resources

The total lignite deposit of the country is estimated at about 2800 million tonnes, out

of which the major deposit is occurring in Tamilnadu ( 2500 million tonnes). The

remaining lignite deposits are found in Gujrat, Jammu & Kashmir and Rajasthan.

Further exploration activities indicate availability of additional lignite resources in

Rajasthan, Gujrat and Tamilnadu.


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Mineral Resources (Other than Coal & Oil)

India is largely self sufficient in most of the minerals which include barytes, bauxite,

chromite, dolomite, fluorspar, gypsum, iron ore, kyanite, limestone, manganese ore,

magnesite, sillimanite, etc. except the minerals like copper, asbestos, lead and zinc,natural phosphates, sulphur and crude petroleum, in which domestic production meets

the demand only partially.

India is rich in the resources of minerals like iron ore, bauxite, manganese, baryte etc.

It has resources of 12745 million tonnes of iron ore, 2,525 million tonnes of bauxite,

76446 million tonnes of limestone, 233 million tonnes of magnesite, 167 million

tonnes of lead & zinc ore, 70 million tonnes of barytes, 176 million tonnes of

manganese ore and 90 million tonnes of chromite. The reserves of iron ore, bauxite

and manganese accounts for nearly 7 per cent, 16 per cent and 6 per cent respectively

of the total known global resources of these minerals. India possesses the largest

known reserves of barytes in the world.

Oil Resources

India has prognosticated hydrocarbon reserves of more than 17 billion tonnes of

which only about 5 billion tonnes have been converted into geological in-place

reserves. This brings out the magnitude of exploratory efforts still to be carried out.

The proved and indicated balance recoverable reserves of crude oil and natural gas are

given in the table below:

Reserves of Crude Oil & Natural Gas

State Crude Oil Natural Gas

Gujrat 143.02 62.11

Assam, Nagaland &

Rajasthan

124.38 106.27

Bombay High 371.04 411.09

Total (All India) 638.44 579.47

*Crude Oil in million Tonnes, Natural gas in Billion Cubic metre

Operating Mines


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India has a unique blend of big and small, manual and mechanised, opencast and

underground mines. The total number of working coal mines as on date are 572, in oil

sector there are 29 oil projects excluding installations off-shore beyond territorial

waters. As far as metalliferous mines are concerned the number of mines which are

submitting returns stands at about 2,500. However, there are many more mines whichare small in size, seasonal in nature and which are not submitting the statutory returns,

a fair estimate indicates that total number of metalliferous mines are about 6000. Total

workforce of the mining industry in India consists of about one (1) million workers.


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Mining in India: Legacy of the past

Coal mining

The development of coal mining in India was historically linked with the developmentof the railway system. Establishment of the railway lines prompted many companies

to take up mining leases. Large number of mining leases were granted by the

erstwhile Zemindars and Rajahs, the terms of leases and the periods varied, some

being in perpetuity, some for 999 years and other for shorter periods. With the

increasing awareness of the values of the properties, lease periods became shorter and

leased areas smaller. By the end of the World War I the prolification of small owners

became a problem and the coal mines of Raniganj & Jharia came to acquire all the

characteristics which created chronic problems in future years.

From as early as the 1920s, the various consultants, commissions and committees sat

over to decide on the question of conservation and scientific exploitation of coal,

working conditions in the mines and safety of the work persons, and thereby regulate

and control the coal industry in India. All of them emphasised the necessity to have

state ownership of the coal mines. The overall problem of coking coal in India has

been studied in depth by a whole herd of prestigious committees including the Indian

Coal Mining Committee (1937), the Indian Coalfields Committee (1946), the

Committee on Metallurgical coal conservation (1950). The Estimates Committee of

the Lok Sabha (1954-55) took notice of the evidence submitted by different agencies.

The then Coal Commissioner in his evidence to the estimates committee wrote among

other thins.

".............. we will be left with a number of units, which if not affected by underground

fires, and other hazardous conditions, would be uneconomic to work." The architect of

coal nationalisation, the late S. Mohan Kumaramangalam, the then Minister of Steel

and Mines had given a vivid description of the mines of Jharia coalfield in his book

"Coal Industry in India".

"Slaughter mining, lack of conservation and unscientific methods remained

characteristic of large areas of the industry ....................... lack of safety & welfare

measures, robbing of pillar of coal, selectives, seasonal and shallow depth mining in a

haphazard manner, etc. seemed to be the guiding principles of a large number of the

private collieries."


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All these, led to the take-over of coking coal mines on the 16th October, 1971.

Subsequently, these mines were nationalised on the 1st May, 1972 and are now

operated by M/s.Bharat Coking Coal Limited (BCCL). By Coal Mines (Taking over

of Management) Ordinance 1973 the non-coking coal mines were also taken over.

The mines were nationalised on the 1st May, 1973 and brought under the managementof the Coal Mines Authrority Limited (CMAL). Later on the CMAL and the BCCL

were merged and the holding company Coal India Limited (CIL) was formed on the

1st November, 1975.

The beginning of coal mining in Central provinces dates from the year 1862 and in the

Rewa state from 1884. The Singareni field in the Hyderabad state had been discovered

in 1872 and went into production some 15 years later. Appreciable development also

took place in Upper Assam from 1881 and in Baluchistan and Punjab (now in

Pakistan) in the last decade of the 19th century. Bokaro Karanpura areas were first

examined between 1846 and 1848. Development of the Bokaro field commenced in

1915. Production from the Karanpura field did not commence until 1925.

No .of Coal Mines in IndiaCompany Wise as on 31.03.2004

Company No. of Collieries

OC UG Mixed Total

COAL:

1. ECL 18 92 2 1122. BCCL 15 49 16 80

3. CCL 35 22 6 63

4. NCL 8 0 0 85. WCL 33 42 5 80

6. SECL 19 76 2 97

7.MCL 14 9 0 23

8.NEC 2 5 0 7Total CIL

(1 to 8)

144 295 31 470

SCCL 12 55 0 67

BSMDCL 1 0 0 1DVC 1 0 0 1

IISCO 0 1 2 3

JKML 1 3 0 4BECML 1 0 0 1

ICML 1 0 0 1

JSPL 1 0 0 1TISCO 2 5 0 7

TOTAL COAL 164 359 33 556


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LIGNITE:

NLC 2 2

GMDCL 2 2GIPCL 1 1

RSMDCL 1 1

TOTAL LIGNITE 6 6TOTAL COAL +LIGNITE

170 359 33 576

NO OF COAL MINESSECTOR WISE AS ON 31-03-2003

STATES NO OF COLLIERIES

OC UG MIXED TOTAL

COAL PUBLIC 160 354 33 547COAL PRIVATE 4 5 0 9

LIGNITEPUBLIC

5 5

LIGNITE

PRIVATE

1 1

TOTAL 170 359 33 562

NO OF COAL MINESSTATE WISE AS ON 31-03-2003

STATES NO OF COLLIERIESOC UG MIXED TOTAL

COAL:

ANDHRA 12 55 67ASSAM 2 4 6

CHHATTISGARH 12 44 2 58

J & K 1 3 4

JHARKHAND 60 85 24 169MADHYA

PRADESH

18 53 4 75

MAHARASHTRA 28 21 1 50MEGHALAYA 1 1

ORISSA 14 9 23

WEST BENGAL 14 84 2 100

UP 3 3TOTAL COAL 164 359 33 556

LIGNITE:

GUJARAT 3 3

TAMIL NADU 2 2RAJASTHAN 1 1

TOTAL LIGNITE 6 6

TOTAL COAL + 170 359 33 562


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LIGNITE

Metalliferous Mines

At the turn of the century, India produced 14 minerals of commercial value. Now, the

country produces 11 metallic and 45 non-metallic minerals except coal and oil. In

India, production of minerals dates back to ancient times. Remnants of old workings

can still be seen in some parts of the country. In fact, some of these have led to the

discovery of several large mineral deposits which are being worked today like Lead &

Zinc in Zawar, Copper in Khetri, Gold in Karnataka etc. Despite the active past, the

metal mining activities in the country remained dormant over a long period until the

beginning of this century.

Growth of the Industry

The post- Independence era witnessed a massive expansion of exploration activities

through various five-year plans which included the augmentation of mineral inventory

as well as addition of a number of mineral reserves to the existing ones. This took the

country into the realm of plenty in respect of some minerals which were earlier

regarded as scarce.

The search for minerals did not remain only on the land mass alone but extended to

off-shore areas and deep seas. Large reserves of oil were discovered in the off-shore

areas and their exploitation opened up new and exciting vistas in the oil sector thereby

conserving huge foreign exchange reserves. In the Indian Ocean, India has explored

successfully the presence of poly metallic nodules lying on the ocean floor at a depth

exceeding 3000 metres which bear metals such as copper, cobalt, nickel, manganese,

etc.

Keeping with the spirit of Industrial Policy for higher targets of mineral production,the expansion and augmentation of mineral based industry in the country was quite

obvious. Therefore, ambitious programmes were launched to increase the production

of minerals to meet the ever growing demand of the core industries like steel, non-

ferrous metals, fertilisers, etc. keeping in view also the higher exports for much

needed foreign exchange. Many public sector organisations were set up to take up


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exploration and exploitation of minerals and the state assumed direct responsibility for

developing mines of important minerals and establishing mineral based industries.

Thus there were increases not only of minerals but also in the metal production as

well as cement, chemicals, fertilizers and several other mineral based products.

The table below indicates the trend in growth of production of some important

minerals in our country.

Production in M ill ion Tonnes

Year Coal Copper Ore Lead &

Zinc Ore

Iron Ore Limestone Bauxite

1951 34.98 0.37 0.01 3.71 2.96 0.06

1961 55.71 0.42 0.15 12.26 15.73 0.48

1971 75.64 0.68 0.30 32.97 25.26 1.45

1981 127.32 2.01 0.96 42.78 32.56 1.75

1991 237.76 5.05 1.82 60.03 75.02 3.86

1993 260.60 5.15 2.10 63.26 87.72 4.81

1994 267.52 4.78 1.90 64.91 86.77 4.70

1995 284.59 4.77 2.10 73.00 93.64 5.09

1996 304.10 4.75 2.06 71.59 120.87 5.35

1997 316.68 4.26 2.01 78.36 123.56 5.17

1998 319.90 4.38 2.23 77.34 116.61 5.91

1999* 313.55 3.28 3.08 73.05 108.29 5.24

*Provisional

In the last two decades, coal mining has witnessed a phenomenal growth in production

from 70 million tonnes in 1971-72 to 246 million tonnes in 1993-94 and is projected

to touch about 400 million tonnes by the turn of the century.

The strategies adopted for rapid expansion of mining activities include increased

mechanisation, adoption of new technologies & their adaptation under Indian geo-

mining conditions and assimilation of latest scientific innovations in the concerned

areas. However, it has also brought in its wake increased hazard potential posing new

problems of safety management.

The new liberalised industrial policy may lead to high and accelerated growth in

mineral industry to complement and supplement the revival and rapid growth of

national economy. The present day environment demands of us to have a fresh look


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at safety management as a structured process composed of well defined systems that

emphasises continuous improvement in work quality, health, welfare and productivity

of workforce engaged in mineral industry through setting up of improved safety

standards and their effective implementation and administration.

Minerals & Economy

The gross value of mineral production in India in 1995 is estimated to be approximate

Rs.2,70,000 million up from about Rs.1,800 million in 1961, i.e. by nearly 150 times.

Mineral wealth and its exploitation have substantially contributed to the growth of

national economy. The contribution of mineral production to the Gross National

Product went up from 1.02% in 1960-61 to 1.54% in 1980-81. Minerals continued to

play a vital role in Indias overseas trade too.

Employment

With the growth of production, employment in the mineral industry has also grown

phenomenally during the last few decades. The following table indicate the trends:

Average daily employment in Mines ( in '000 )Year Coal Oil Copper Gold Iron Lime Mang. Mica Stone Others Total

Ore Ore Ore Stone Ore Metals1951 351.9 N.A. 3.7 21.9 20.2 16.0 55.5 25.2 5.1 49.5 197.11961 411.2 N.A. 4.2 16.3 54.5 54.6 46.9 29.6 8.5 45.1 259.71971

382.3

13.6

7.6

12.4

52.8

53.2

30.4

12.2

8.8

57.5

234.9

1981 513.4 14.5 13.4 12.3 44.9 49.8 26.5 6.7 7.7 60.6 221.91986 543.3 24.9 13.2 11.9 46.6 50.2 17.7 3.3 10.2 68.1 221.21987 549.7 25.9 12.6 11.6 48.8 51.2 17.6 3.3 10.8 69.6 225.51988 537.8 26.6 12.3 10.9 46.0 43.0 17.4 2.8 14.2 60.5 207.11989 548.1 25.2 10.8 10.5 44.5 44.6 16.1 2.9 12.9 62.0 204.31990 549.0 26.9 12.3 9.7 38.1 41.5 17.3 2.3 10.1 58.0 189.31991 554.1 35.5 12.8 9.3 40.1 43.5 17.9 2.2 11.2 63.2 200.21992 552.0 35.7 12.7 9.4 42.0 43.0 18.4 1.6 8.9 67.2 203.21993 546.3 33.5 12.2 7.9 39.8 41.6 18.5 1.5 9.2 68.9 199.61994 523.7 34.3 11.2 7.4 38.5 39.8 18.2 1.7 9.4 65.2 191.41995 513.3 34.0 10.5 7.1 39.6 39.8 18.1 1.8 7.5 64.4 188.81996 506.4 33.4 9.9 6.9 39.2 35.7 18.1 1.2 5.2 60.1 176.31997 503.4 28.6 10.3 6.8 38.6 33.0 16.0 1.2 4.9 61.6 172.41998 491.3 29.5 8.7 6.1 37.3 31.2 15.9 1.1 5.3 59.3 164.91999* 486.7 25.0 7.3 6.1 38.7 30.0 14.8 0.9 4.9 63.0 165.7

*Provisional

Although no firm figures regarding %age of persons employed under contractors in

mineral industry could be ascertained but during the visit of the sub-committee of the

installations in Kalol oil fields under ONGC, it was reported that approximately 25%


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of the total workforce engaged at work were employed under contractors on one

pretext or the other.

The trend reveals that there has been a gross reduction in employment potential in

winning of gold ore, manganese ore and mica . This has come about basically due totwo reasons . Firstly the lack of demand of the minerals due to substitution of the

same in the user industry viz. the manganese ore in manufacture of steel & mica as

insulating material in electrical industry, secondly to the rising cost of production of

gold from the poor quality of gold ore available in the country vis--vis global market.

Barring above the employment in the mineral industry has shown tremendous growth

over the years. It is anticipated that the average daily employment in the mineral

industry at present is about 1(one) million.

Exploitation of resources: Problems faced

Mining industry in India has been progressing at an annual rate of 4% to 5% during

the last three decades. It appears that the concept of growth at all cost has become

the order of the day. This is rather too heavy a price to pay for developments sake.

This mad rush to produce gives way to unsustainable developments.

As far as mining is concerned, the price for progress has also been quite high. The late

S Mohan Kumarmangalam, the then Minister of Steel & Mines had given a scathing

but vivid description of the coal industry scene in his book Coal Industry in India.

This was generally true of smaller units specially spread over in the Jharia and

Raniganj fields.

"Workers were cheated of their legitimate dues. Slaughter mining, lack of

conservation and unscientific mining methods remained characteristic of large areas

of the industry. The mine owners successfully prevented any further progress towards

implementation of the numerous recommendations of the different committees made

over the years. Lathials or musclemen protected the interests of the mine owners.

Rampant corruption, forced labour, dubious and duplicate records, under reporting of

production, non-payment of full wages, extended hours of shift without payment of

lead or lift, lack of safety and welfare measures, robbing of pillars of coal, selective,

seasonal and shallow depth mining in a haphazard manner etc. seemed to be the

guiding principles of a large number of private collieries."


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Violations of mine safety laws were widespread. The extensive fires and collapses

were the result of unscientific mining practiced over the years and the cost to the

nation was considerable in the shape of loss of coal reserves and in controlling fires.

Mine ventilation was poor, support inadequate, safety equipment conspicuous by their

absence. The hazards to which workers were exposed had been a matter of severecriticism. A dangerous situation had developed and the Government could no longer

remain a passive spectator. This paved the way for nationalisation of the coal industry

during 1971-73.

Though the situation since then has improved considerably in some of the areas, many

problems of the past remain and need to be addressed sincerely at this point in time.

Quest for development has to go hand in hand with rapid industrialisation, and mining

has to remain an important cog in the wheel of development. It is expected that

accentuated efforts on mining shall be witnessed in the years to come. As the mine

operators begin to look forward for ways and means to improve efficiency and cut

costs, safety considerations certainly assume more and more important position and

emerge as significant factor even purely on economic considerations. Side by side

modern society is also tending more and more to demand a safe and decent work

environment, as a social need. Thus, results are being demanded. Tools and skill are

available, and achievement with tremendous humanitarian and economic benefits are

within the realm of practical possibility.

major players india:

20 Microns Limited- Producer of industrial functional minerals Ashapura Minechem- Industrial minerals exporter Bird Group of Companies- Consortium of coal, limestone and mineral exploring companies Bombay Mineral- Manufacturer minerals and refractories Central Mine Planning & Design Institute Ranchi- Exploration, mine planning & design Export Linkers- Mica flakes and powder manufacturer

GR Group- Mining and processing of mica Indian Metals and Ferro Alloys Bhubaneswar- Power generation and chrome ore mining JM Exports- Mica exporters Kariganur Mineral Mining Industry, Hospet- Iron ore producer Kerala Minerals & Metals- Mineral producer & separator Kudremukh Iron Ore- Iron ore concentrate & pellets Mahavir Minerals -Manufacturer & exporter of feldspar, quartz, mica etc Mitco- Supplier of industrial minerals Neyveli Lignite Corporation- Open-cast mechanised lignite mining
http://www.20microns.com/http://www.20microns.com/http://www.ashapura.com/http://www.ashapura.com/http://birdgroup.gov.in/http://birdgroup.gov.in/http://www.bombaymineral.com/http://www.bombaymineral.com/http://www.cmpdi.co.in/http://www.cmpdi.co.in/http://www.exportlinkers.com/http://www.exportlinkers.com/http://www.grmica.com/http://www.grmica.com/http://www.imfa.in/http://www.imfa.in/http://jmexport.ebigchina.com/http://jmexport.ebigchina.com/http://www.kmmindustry.com/http://www.kmmindustry.com/http://www.kmml.com/http://www.kmml.com/http://kioclltd.in/http://kioclltd.in/http://www.mahavirminerals.com/http://www.mahavirminerals.com/http://www.mitco-india.com/http://www.mitco-india.com/http://www.nlcindia.co.in/http://www.nlcindia.co.in/http://www.nlcindia.co.in/http://www.mitco-india.com/http://www.mahavirminerals.com/http://kioclltd.in/http://www.kmml.com/http://www.kmmindustry.com/http://jmexport.ebigchina.com/http://www.imfa.in/http://www.grmica.com/http://www.exportlinkers.com/http://www.cmpdi.co.in/http://www.bombaymineral.com/http://birdgroup.gov.in/http://www.ashapura.com/http://www.20microns.com/


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Orissa Mining Corporation- Iron, chromite & manganese mining

Parasramka Mica Industries- Mica manufacturer Resources International- Production & export of iron ore

Rockwell Engineering- Equipment for underground and surface mining

Rungta Mines- Mining of iron & manganese ore

Sahjanand Group- Manganese dioxide and ferro alloys manufacturer Tamil Nadu Magnesite Limited- Exploration & preservation of magnesite mineral

ore

Timblo Ltd- Involved in iron and manganese ore mining and export Tungabhadra Minerals- Involved in iron ore mining Unotherm- Refractories, insulations, refractory raw material and minerals

supplier

Major players international

Glencore Xtrata

Glencore Xstrata, created through the merger of the world's biggest commodities trader Glencore and thediversified mining company Xtrata in May 2013, is the world's biggest mining company. The mining andtrading conglomerate headquartered in Switzerland reported revenues exceeding $200bn from industrialand marketing activities in its metals and minerals, and coal and oil segments in 2013.The company's mining operations encompass over 150 mining and metallurgical sites around the world.Revenue from the metals and minerals business including copper, nickel, zinc/lead, alloys,alumina/aluminium and iron ore was over $64bn in 2013. Glencore Xstrata also produced 138.1 milliontonnes of coal in 2013 recording industrial revenues exceeding $10bn.TheZanagairon ore mine in Republic of Congo, theCollahuasicopper mine in Chile, theAntaminacopper-zinc minein Peru, and theCorrejon coal minein Colombia are among the major mining operationsin which Glencore Xtrata holds significant interests.

BHP Billiton

Australian miner BHP Billiton earned $67.83bn revenues in the year ending in December 2013 making itthe world's second biggest mining company. The major mining commodities produced by the companyinclude aluminium, coal, copper, iron ore, manganese, nickel, silver and uranium.The company's Iron ore operations, the third biggest in the world, comprising the Western Australia IronOre operations in the Pilbara region of Australia and the Samarco iron ore operation in Brazil, account forabout one third of its revenue. Samarco Alegria is the world's second biggest iron ore mine.Copper is the second biggest revenue source for the company. BHP Billiton operates the world's biggestcopper mineEscondida in Chile. It also owns three of theworld's ten biggest coal mines- the PeakDowns coal mine in central Queensland, Australia,Mt Arthur coal minein the Hunter, Valley region of

New South Wales, Australia, and theCerrejon coal minein Colombia.Olympic Damin Australia, a majorpoly-metallic mine and the second biggest uranium producing mine in the world, is also owned andoperated by BHP Billiton.

Five of the most controversial mining projects of 2013
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The number of controversial mining projects around the world is on therise and 2013 was no exception.

Rio TintoThe British-Australian multinational mining company Rio Tinto headquartered in London earned grosssales revenue of $54.6bn in the year ending in December 2013 becoming the world's third biggest miner.Rio Tinto is the second biggest iron ore producer in the world. Iron ore accounted for over $25bn of thecompany's revenue in 2013. The revenue from aluminium and copper stood at $12.4bn and $5.9bnrespectively. The company's coal mining operations in Australia and Mozambique together accounted for$4.5bn in revenue. The diamond and minerals business contributed $4.1bn of revenue.Simandouin Guinea andHamersleyin Australia, both operated by Rio Tinto, are among the world's tenbiggest iron ore mines. The company holds 30% interest in Chile's biggest copper mine Escondida. RioTinto operates two of thetop ten uranium producing mines in the world,namely theRangeruranium minein Australia and theRossinguranium mine in Namibia. It also owns and operatesArgyle,one of thebiggest diamond mines in the world.

ValeVale, the Brazilian multinational metals and mining company with revenues of $48.9bn in 2013, is theworld's fourth biggest miner. Vale is the world's biggest iron ore producer and the second biggest nickelproducer.Iron ore and pellets accounted for 58% and 12.6% of the company's total revenue respectively in 2013.Base metals including nickel, copper, gold and platinum group metals (PGMs) contributed 14.9% of thecompany's revenue. Fertilisers including potash, phosphate and nitrogen accounted for 6.1% of therevenue whereas coal accounted for 1.9%. Asia contributed for 54.2% of Vale's revenue in 2013, of whichChina alone accounted for 38.6%.Vale operates three of theworld's biggest iron ore minesincluding the world biggestCarajas iron oreminelocated in the state of Para in Northern Brazil. The company also holds 50% interest in SamarcoAlegria. The Vale-operatedMoatize coal minein the Tete Province of Mozambique is the world's fourthbiggest coal mine by reserve.

Coal giants: the worldsbiggest coal producing countries

Mining-technology.com profiles the world's 10 biggest coal producingcountries based on annual coal production. .

Anglo American

The British multinational mining company Anglo American headquartered in London, UK, recorded$33.06bn of revenue in the year ending in December 2013 becoming the world's fifth biggest miner.The company produced 42.4 million tonnes (mt) of iron ore, 97.8mt of coal, 34,400t of nickel, 2.32 millionounces (moz) of platinum and 31.2 million carats of diamonds in 2013. Diamonds accounted for $6.39bnwhereas iron ore and copper accounted for $5.3bn and $5.2bn respectively as part of total revenue.Revenues from thermal coal and metallurgical coal stood at $3.8bn and $2.6bn respectively, while
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platinum contributed $3.58bn. Mining operations in South Africa followed by Chile generated the biggestshare of the company's revenue in 2013.Anglo American's wholly ownedMinas-Rio iron ore projectin Brazil andSishen mine,part of its Kumbairon ore operations in South Africa are among the world's 11 biggest iron ore mines. The company alsoholds significant interests in Collahuasi and Los Bronces mines in Chile, which rank among theworld's 10biggest copper mines.

China Shenhua EnergyChina Shenhua Energy, China's state-owned coal mining enterprise with estimated revenue of $32.1bn inthe year ending in December 2013, ranks as the world's sixth biggest mining company.The Chinese miner produced 318.1mt of coal and sold 514.8mt of coal at an average price of CNY392.3($62.37) during the year. The company's coal sales in 2013 represented a 10.8% increase over those in2012. The seaborne coal sold during 2013 stood at 227.3mt. The company was estimated to hold 15.12billion tonnes of recoverable coal reserves as of December 2012.The Shenhua-owned Haerwusu coal mine and the Hei Dai Gou or Heidaigou coal mine both located inthe Inner Mongolia Autonomous Region of China are the world's second and thirdbiggest coal minesbyreserves.

The worldsbiggest iron ore mines

Mining-technology.com profiles the worlds biggest iron ore miningoperations based on recent estimates of proven and probable reserves. .

Freeport McMoRan Copper & Gold

Revenue of $18.3bn from mining operations in the year ending in December 2013 make FreeportMcMoRan Copper & Gold (FCX), the US-based natural resource company headquartered in Phoenix,Arizona, the world's seventh biggest miner.The company produces copper, gold, molybdenum and cobalt, and has mining operations in NorthAmerica, South America, Africa and Indonesia. Freeport produced 4.13 billion pounds of copper, 1.25mozof gold, and 94mlbs of molybdenum in 2013.FCX'sGrasberg open pitmining operation in Indonesia boasts the world's biggest gold reserves and thetenth biggest copper reserves. The company produced 915mlbs of copper and 1.1moz of gold from theGrasberg complex in 2013.

Barrick Gold

The world's biggest gold mining company Barrick Gold earned $12.5bn revenues in the year ending in

December 2013 becoming the world's eighth biggest miner. The Canadian multinational mining giantreported revenues of $14.39bn for 2012.Barrick Gold carries out gold and copper mining operations in Australia, Africa, North America and SouthAmerica. It produced 7.16moz of gold and 539mlbs of copper in 2013. Barrick's gold reserves by the endof 2013 stood at 104.1moz and its copper reserves were estimated at 14 billion pounds.Barrick owns and operates three of theworld's ten biggest gold minesincluding thePueblo Viejogoldmine the Dominican Republic and theCortez gold minein Nevada, US. Goldstrike in Nevada, LagunasNorte in Peru and Veladero in Argentina are the other major gold mines operated by Barrick.
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Roundtable the low down on mining labour trends for 2014

What does the labour market in the global mining industry look like in2014?

Coal India Limited

The Indian state-controlled coal mining company Coal India Limited (CIL) with net sales revenue over$11bn in the year ending in December 2013 ranks as the world's ninth biggest mining company. CILproduces about 80% of the coal production in India, which is the third biggest coal producing country.CIL operates over 460 coal mines in 81 mining areas spread over eight Indian provincial states throughseven wholly owned coal producing subsidiary companies - Eastern Coalfields Limited (ECL), BharatCoking Coal Limited (BCCL), Central Coalfields Limited (CCL), Western Coalfields Limited (WCL), South

Eastern Coalfields Limited (SECL), Northern Coalfields Limited (NCL) and Mahanadi Coalfields Limited(MCL).The state-owned coal mining enterprise produced 452.21mt of coal in the fiscal year ending in March2013. Coal production during April 2013 and January 2014 stood at 366mt. SECL, followed by MCL, isthe biggest coal producing subsidiary of CIL. The company was estimated to hold 21.75 billion tonnes ofextractable coal reserves as of April 2010.

Fortescue Metals Group

The world's tenth biggest mining company Fortescue Metals Group (FMG) earned revenue of $10.69bnfor the year ending in December 2013. The Australian mining company is also the world's fourth biggestiron ore producer after Vale, Rio Tinto and BHP Billiton.FMG operates predominantly in the Pilbara region of Western Australia and shipped 99.1mt of iron ore in2013. China, the world's biggest coal consuming country, accounted for more than 90% of Fortescue's

iron ore sales in the year.The FMG-operatedChichester Hubcontaining 1.51 billion tonnes of iron ore reserves (57.6% Fe) as ofJune 2013 ranks as the world's eighth biggest iron ore mine. Solomon Hubis the other notable iron oremining operation of FMG.
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Growth international

AfricaChallenges and key considerations Resource nationalism Shortages of skilled resources High level of HIV/AIDsAccess to transport and utility infrastructure Regulatory and fi scal regimescomplying and operating in constantly evolvingregulatoryand fi scal environments Increased regulations around climate change in some countries Government/indigenous ownership Socioeconomic and social-political challengesthese can infl uence competitiveness,stability and performance of labor High cost of capitalthe lack of developed capital markets could mean high cost of

capital Drop in rankingsAfricas average Policy Potential Index score declined further in theFraser Institutes 2012/2013 mining survey. Botswana (with rank of 17) is the only

Africancountry in the top 20 nationsTax and regulatory landscape The tax and regulatory requirements vary greatly acrossthe continentIncreasing resource nationalismthis is a common driver of the tax agenda in many

Africancountries, with notable exceptions, such as Mozambique and BotswanaRoyalty ratesthese vary and are often differentiated by commodity and/or by whether

thecompany is domestic or inboundTax deductionssome countries are making signifi cant efforts to increase internationalinvestment by offering tax deductions on research and development, export marketdevelopment costs, and pre-production expensesRecent changes to tax policy in the region: DRCincreased its tax on copper and cobalt concentrates from US$60 to US$100permetric ton to increase domestic benefi ciation Gabonwill introduce mandated benefi ciation Ghanaintroduced the National Fiscal Stabilisation Levy Bill that will impose a 5% tax

onprofi ts of mining companies Mozambiqueis reportedly set to introduce a 32% capital gains tax on the sale oflocalassets by foreign countries from January 2014 Tanzaniawill introduce mandatory procurement of at least 80% of goods andservicesfrom local businesses by 2015


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Growth and enabling factors Vast mineral reservesthe African continent accountsfor nearly two-thirds of the worldsmineral reserves and more than half of the worlds mineral reserves for gold, platinum group metals, cobalt and diamonds. Africa also has one of the largest reserves ofuranium,

manganese and chromium in the world Major minerals producerAfrica produces more than 60 minerals and is a majorproducerof gold, platinum group metals, diamonds, uranium, manganese, nickel, bauxite, cobaltand chromium High levels of exploration activityduring the last few years, exploration activitiesacross the African continent have signifi cantly increased. In 2012, more than 17% ofglobal exploration costs were incurred in Africa, with the DRC holding the top place forexploration spending in Africa. Of particular interest are the recent signifi cant fi ndingsofcopper, cobalt, thermal coal, metallurgical coal, iron ore, uranium, bauxite, gold and

nickeldeposits Investment destinationrapid-growth markets, such as China and India, are investingheavily in Africa to secure supply of minerals. Botswanas favorable mineral investmentclimate, low tax rates and political stability are expected to continue to attract foreignmineral investment. It has some of the lowest tax rates in the region and there is littlegovernment interference in the mining sector Investment-friendly policiesmany African countries are taking steps to encourageinvestment, e.g., Mozambique has pledged not to increase mining taxes.

BrazilChallenges and key considerations Bottlenecked infrastructure Skills shortages Government regulation and bureaucracyreduces the countrys attractiveness toinvestment Tax policyuncertainty around the countrys tax regime with the delay in the recent taxpolicy and upcoming elections Corruptionranks 69th on Transparency Internationals Corruption PerceptionsIndex 2012Tax and regulatory landscape The fi scal regime that applies to the mining sector in Brazil consists of federal corporateincome tax (CIT) and Government takes at the federal and state levels Corporate income tax34% (including 9% of social contribution on net profi t) Capital allowancesaccelerated depreciation, capital uplift Investment incentivestax losses can be carried forward indefi nitely; research anddevelopment incentives; income tax incentives for companies investing in undevelopedareas (North and Northeast regions) Federal royaltiesfi nancial compensation for exploration of mineral resources (CFEM).

Royalty-type levy of 0.2% to 3%, depending on the type of mineral extracted State royaltiescontrol, monitoring and supervision of research activities, mining,exploration and exploitation of mineral resources fee (TFRM). Varies depending on thestate where the mine is located. Generally a fi xed amount, set by each state, based on thevolume of mineral extracted Withholding taxminimum 15% interest withholding tax. No dividend withholding tax Landlord costs50% of CFEM, due to the owner of the landAnnual fee per hectareBRL2.02 per hectare or BRL3.06 per hectare upon renewal ofProspecting Authorization License Federal VAT on gross sales (PIS and COFINS)at a combined rate of 9.25% State VAT on gross sales (ICMS)tax rate varies depending on the state Tax reformsexpected in Brazil to make it a more competitive and attractive investment


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destinationGrowth and enabling factors 2014 Football World Cup and 2016 Olympicsthese events will aid fast development ofimproved infrastructure and transportation links, which will have knock-on benefi ts for themining sector Mining codeonce this has been legislated and there is more certainty around the code,increased foreign direct investment is expected Favorable lending ratesBrazilian companies and entities developing assets in Brazil cansource favorable rates from the National Development Bank, which is trying to encouragelocal development

Mainland ChinaChallenges and key considerations Slowing GDP growthhaving grown at an average GDP rate of more than 10% over thelast decade, the Chinese GDP growth has slowed to 7.8% as at 3Q 2013 Raw materials shortageChina is short of important raw materials, such as iron ore andcoal used in steel production and bauxite needed for aluminium production Pollution reductionhigh levels of pollution areas across the region has seen theGovernment intervene to reduce pollution Drop in rankingsChina registered the most signifi cant drop in the Fraser InstitutesPolicy Potential Index score in the 2012/2013 mining survey. China now ranks 72nd ascompared to 58th in 2011/2012 mainly due to worsening perceptions amongst the surveyrespondents regarding the level of security and the uncertainty concerning environmentalregulations Domestic M&A activity mutedmost of the Chinese mining M&A landscape is dominated

by Government-backed Chinese mining companies acquiring assets abroad, while Chinesedomestic and in bound mining M&A activity remains lacklusterTax and regulatory landscape The fi scal regime that applies to the mining and metals sector in China consists ofvalue-added tax, resource tax, royalty/mining license tax, business tax and corporateincome tax Value added taxmining products taxed at rates of 0% (exempted), 13%, to 17% Business taxfrom 3% to 20% Resource taxapplicable for all entities and individuals engaged in the exploitation ofmineral resources or the production of salt Income tax25% Investment incentivesqualifi ed research and development expenditure deductible at150% of the actual expensesGrowth and enabling factors Go-Global Strategyan estimated US$116b is to be spent in the mining and metals sectorin the next three years. Nine key industries, including steel, aluminium and rare earths, aremandated to go out and acquire rivals to create globally competitive mining companies.China has already announced plans to direct more capital to South and Central Americaand has started refocusing on African minerals 12th Five-Year PlanChina intends to shift its focus from infrastructure-driven growth to

consumption-driven growth Top producing nationChina controls more than half of steel, almost half of aluminiumand over a third of all iron ore production. It is the worlds top gold producer and alsocontrols most of the worlds rare earth production (95%).14 Strong domestic demandChina is the largest consumer of a number of minerals andmetals in the world. It consumes around half of global steel and aluminum and is thetop consumer of other processed metals such as copper and zinc. China is also the topconsumer of coal and mineral ores such as iron ore, bauxite, copper and zinc which feedin to their respective processing industries.15 Changes to Chinas supply and demand forthese minerals and metals has the potential to materially alter global minerals and metalstrade fl ows. Top investorChina was the most acquisitive nation in 2012 in value terms at US$21.7b 16

IndiaChallenges and key considerations Land access and availability Federal structure and cumbersome processesstalling new concessions Under exploredvery low exploration spend by the entrusted Government entities CorruptionIndia ranks 94th in Transparency Internationals Corruption PerceptionsIndex 2012 Policy delaysthe national elections in mid-2014 could delay new policy decisions in thenext few quartersTax and regulatory landscape Domestic company30% International company40%Applicable surchargeSurcharge range from 0% to 10% of tax for domestic companiesand 0% to 5% of tax for foreign companies depending upon the taxable income, andeducation levy of 3% on tax and surcharge Capital allowanceaccelerated depreciation available for certain Plant and Machinery Investment incentivesloss carryforward; research and developmentGrowth and enabling factors Major minerals producerIndia produces as many as 89 minerals, and among the majorminerals, India is the 3rd, 4th, 5th and 6th largest producer of coal and lignite, iron ore,


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manganese and bauxite, respectively17 Infrastructure investmentin its 12th Five-Year Plan, India has announced plans to investUS$1t in infrastructure Growth potentialper capita consumption of most of the ferrous and non-ferrous metalsis below global average, creating an opportunity for mining and metal majors Streamlined sectorthe MMDR Bill approved by the Government in 2011 has undergoneseveral modifi cations and is still awaiting enactment; its implementation could streamlinemany mining-related processes in the country

RussiaChallenges and key considerations Cumbersome bureaucracy CorruptionRussia ranks 133rd in Transparency Internationals CorruptionPerceptions Index Challenging terrainmost of the countrys minerals wealth is located in remote andinhospitable areas of the country Poor energy infrastructure Limited allowable participationthe sector is deemed strategic for the country andrestrictions apply to foreign investors and partnersTax and regulatory landscape The fi scal regime that applies to Russia to the mining and metals industry consists of acombination of corporate income tax and royalties: Income tax ratecorporate income tax rate of 20% Capital allowancesdepreciation premium applies Investment incentivesloss carryforward Royaltiesmineral extraction tax and regular and one-time paymentsGrowth and enabling factors Well-developed domestic mining services and equipment industries Reliable transport infrastructure Government supportmining companies that commit to spend on improving rail and port

infrastructure, particularly in the Siberian and Far Eastern regions, are likely to receiveGovernment backing for their projects Major minerals producerRussia is the second-largest producer of nickel and produces40% of the worlds PGM.18 It ranks among the worlds top 10 mining jurisdictions for bothproduction and reserves, with huge subsoil resources. It holds an estimated 15% to 17% ofthe worlds mineral deposits

(india)

demand:

COPPER:

Refined copper production in India is currently dominated by three major players, HCL,Hindalco and SIL. While HCL produces copper metal from the ore produced at its captivemines, Hindalco and SIL have shore-based smelters and are dependent entirely on importedmetal-in-concentrates.Refined copper is traded globally in the form of copper cathodes and continuous cast (CC)copper rods while other forms are very insignificant. India is a net exporter of refined copper,though exports have reduced over the last few years, with the expansion of domestic demandand range-bound production. Refined copper exports account for 36% of domestic production.Nearly 50% of Indias copper and alloy exports are to China, Saudi Arabia and the United ArabEmirates.Refined copper imports, on the other hand accounted for less than 4% of the domestic demandfor refined copper. Copper sales in India have increased at a CAGR of 8% during the last fiveyears, whereas refined copper consumption has witnessed a growth of 10% CAGR.

Zinc and Lead Ores:

Zinc: According to the Planning Commission, demand for refined zinc in India was around503,000 tonnes in 2010-11, as against a production figure of 743,376 tonnes, implying that thecountry is currently self-sufficient in zinc production.

It is pertinent to note that the current per capita consumption of zinc in the country is 0.41 kg as


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against a world average of 1.7 kg. The low level of per capita consumption and a large pipelineof infrastructure projects in the country will significantly push up the demand for zinc in thecountry in the future. Zinc metal consumption in India is expected to grow at the same rate asthe Gross Domestic Product (GDP) of the country according to Hindustan Zinc limited.

Lead: While India is self sufficient in the production of zinc, the countrys lead producing

capacity is far below demand. According to the Planning commission, the demand for lead inIndia grew by 7% to 380,000 tonnes in 2010-11 as against 355,000 tonnes in 2009-10. Thecurrent demand for lead metal is about 4 lakh tonnes. The main growth driver has been theincrease in the demand for auto batteries by original equipment manufacturers. According toHindustan Zinc limited, lead demand is expected to grow and sustain the 7% growth rate in thecoming years.

GOLD:

The demand for gold in India is not only the highest in the world but also the fastest growing.With the Indian economy projected to grow at 8% during 12th plan, the demand for gold can onlyincrease further. The World Gold Council (WGC) has estimated Indias gold consumption in

2011 to be 1,167 tonnes, whereas gold demand in the world has been relatively stable rangingbetween 3,729 and 3,812 tonnes during the period 2001 to 2010. However, on account ofincrease in prices, the world demand in value terms has increased five times (from 32.5 billionto 150 billion) during the last 10 years.

SILVER:

Against the current meagre indigenous production (around 200 tonnes) from primary sources,the demand estimates are for 3,000 tonnes per annum. Thus, demand satisfaction is only 6%by primary production. The balance demand is met by imports from various countries. This willcontinue in future.

PLATINUM GROUP OF ELEMENTS / METALS:

The platinum demand in India is increasingly steadily over the years with rising imports ofaround 10 tonnes in 2009-10. The demand is however increasing substantially.

DIAMOND:

The consumption of diamonds jewellery in India presently is more than US$ 6 billion (Rs 30,000crores) as against US$ 1 billion five years ago. This accounts for 45% of the global jewelleryconsumption. The demand is expected to rise to 10% of the global demand in the near future.India exported cut and polished diamonds worth US$ 28.26 billion in 2010-11 against roughdiamonds imports of US$ 11.93 billion with a significant value addition of US$ 16.32 billion.

Growth of the Industry

The post- Independence era witnessed a massive expansion of exploration activities

through various five-year plans which included the augmentation of mineral inventory

as well as addition of a number of mineral reserves to the existing ones. This took the


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country into the realm of plenty in respect of some minerals which were earlier

regarded as scarce.

The search for minerals did not remain only on the land mass alone but extended to

off-shore areas and deep seas. Large reserves of oil were discovered in the off-shoreareas and their exploitation opened up new and exciting vistas in the oil sector thereby

conserving huge foreign exchange reserves. In the Indian Ocean, India has explored

successfully the presence of poly metallic nodules lying on the ocean floor at a depth

exceeding 3000 metres which bear metals such as copper, cobalt, nickel, manganese,

etc.

Keeping with the spirit of Industrial Policy for higher targets of mineral production,

the expansion and augmentation of mineral based industry in the country was quite

obvious. Therefore, ambitious programmes were launched to increase the production

of minerals to meet the ever growing demand of the core industries like steel, non-

ferrous metals, fertilisers, etc. keeping in view also the higher exports for much

needed foreign exchange. Many public sector organisations were set up to take up

exploration and exploitation of minerals and the state assumed direct responsibility for

developing mines of important minerals and establishing mineral based industries.

Thus there were increases not only of minerals but also in the metal production as

well as cement, chemicals, fertilizers and several other mineral based products.

The table below indicates the trend in growth of production of some important

minerals in our country.

Production in M ill ion Tonnes

Year Coal Copper Ore Lead &

Zinc Ore

Iron Ore Limestone Bauxite

1951 34.98 0.37 0.01 3.71 2.96 0.06

1961 55.71 0.42 0.15 12.26 15.73 0.48

1971 75.64 0.68 0.30 32.97 25.26 1.45

1981 127.32 2.01 0.96 42.78 32.56 1.751991 237.76 5.05 1.82 60.03 75.02 3.86

1993 260.60 5.15 2.10 63.26 87.72 4.81

1994 267.52 4.78 1.90 64.91 86.77 4.70

1995 284.59 4.77 2.10 73.00 93.64 5.09

1996 304.10 4.75 2.06 71.59 120.87 5.35

1997 316.68 4.26 2.01 78.36 123.56 5.17


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1998 319.90 4.38 2.23 77.34 116.61 5.91

1999* 313.55 3.28 3.08 73.05 108.29 5.24

*Provisional

In the last two decades, coal mining has witnessed a phenomenal growth in production

from 70 million tonnes in 1971-72 to 246 million tonnes in 1993-94 and is projected

to touch about 400 million tonnes by the turn of the century.

The strategies adopted for rapid expansion of mining activities include increased

mechanisation, adoption of new technologies & their adaptation under Indian geo-

mining conditions and assimilation of latest scientific innovations in the concerned

areas. However, it has also brought in its wake increased hazard potential posing new

problems of safety management.

The new liberalised industrial policy may lead to high and accelerated growth in

mineral industry to complement and supplement the revival and rapid growth of

national economy. The present day environment demands of us to have a fresh look

at safety management as a structured process composed of well defined systems that

emphasises continuous improvement in work quality, health, welfare and productivity

of workforce engaged in mineral industry through setting up of improved safety

standards and their effective implementation and administration.

Minerals & Economy

INVESTMENT RELATES ASPECTS:

Swot analysis

Indian Mining Industry

India is endowed with significant mineral resources. India produces 89 minerals out of which4 are fuel minerals, 11 metallic, 52 non-metallic and 22 minor minerals. In India, 80% ofmining is in coal and the balance 20% is in various metals and other raw materials such as


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gold, copper, iron, lead, bauxite, zinc and uranium. India with diverse and significantmineral resources is the leading producer of some of the minerals.

The total value of mineral production was Rs. 568070 million in 2000-2001, of which thevalue of minerals other than petroleum and natural gas was Rs. 306751 million. The

metallic production is accounted for by iron-ore, copper-ore, chromite and/or zinc

concentrates, gold, manganese ore, bauxite, lead concentrates. Amongst the non-metallicminerals, more than 90 percent of the aggregate value is shared by limestone, magnesite,

dolomite, barytes, kaolin, gypsum, apatite & phosphorite, steatite and fluorite.

India is the world's largest producer of mica blocks and mica splittings. With the recent

spurt in world demand for chromite, India has stepped up its production to reach the thirdrank among the chromite producers of the world. Besides, India ranks 3rdin production ofcoal & lignite and barytes, 4thin iron ore, 6thin bauxite and manganese ore, 10 in

aluminium and 11 thin crude steel in the World.

Over 1.1 million people are employed in the Indian mining industry. With over 2,326

private and 292 public operating mines in the country, minerals form 16 percent of India's

exports.

Coal Mining

The majority of the energy requirement in India is met by coal, largely mined in the easternand the central regions of the country. In 2004-05, the total coal production in the country

was around 350 million MT and majority of it catered to the core sectors of power, steel andcement. Inspite of various policy initiatives to diversify the fuel mix, it is becoming

increasingly evident that coal will continue to play the major role in sustaining the growthmomentum of India. Based on estimates, the consumption of coal is projected to rise by

nearly 40 percent over the next five years and almost to double by 2020. However, in the

recent past, the coal sector in the country has come under pressure over its inability tomeet demand (both planned and unplanned) of the user industries. By Government's own

estimates, coal production will lag behind demand by about 100 million MT as of 2012 andby 250 million MT by 2020.

Major players in coal mining


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Name of Company Production2004 (MMT)

CIL (Public Sector) 306SCCL (Public Sector) 34Others 21Total 361

Note: Excludes NLC production of lignite

Type-wise and Category-wise coal resources of India as on January 1, 2005 (inMillion Tonnes):

Type of Coal Proved Indicated Inferred Total(A) Coking :--Prime Coking 4614 699 - 5313-Medium Coking 11417 11765 1889 25071-Semi-Coking 482 1003 222 1707Sub-Total Coking 16513 13467 2111 32091(B) Non-Coking*:- 76447 103623 35686 215756

Total (Coking & Non-Coking) 92960 117090 37797 247847

Metal Mining

India is rich in mineral resources with large reserves of primary metal ores like iron ore,bauxite, chromium, manganese and titanium. India has

13 billion tonnes of iron ore reserves 5thlargest reserve base in the world 2.3 billion tonnes of bauxite reserves 4thlargest reserve base in the world 160 million tonnes of manganese reserves 2ndlargest reserve base in the world 57 million tonnes of chromium reserves 3rdlargest reserve base in the world

Indian deposits of bauxite and iron ore are among the best in the world in terms of qualityand mineability

Life Indices: Some Important non-fuel MineralsS.No.

Mineral/Ore/Metal *Recoverable reserves estimated as on1.4.2000 ( Based onexploration/prospecting)

Life Index(years)

. . Figure in million tonnes unless otherwisespecified

(m.tonnes)

1 Bauxite 2462* 2112 Copper metal (tonnes) 5297,000 803 Lead metal (tonnes)) 2381,000 454 Zinc metal (tonnes) 9707,000 455 Gold metal (tonnes) 68* Not Estimated6 Iron ore 13460* 1317 Chromite Ore 97 468 Magnesite 245* 5429 Manganese Ore 167* 4710 Limestone 75679* 25411 Phosphorite (Rock Phosphate) 142 7912 Sillimanite 516* Very large


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II Garnet 52* 9016 Kyanite ( tonnes) 2817000* 26517 Dolomite 4387* 43818 Diamond ( Thousand carats) 982* 19

CONTRIBUTION OF THE PUBLIC SECTOR

The public sector contributes over 85 percent of the total value of mineral production.

However, it is the avowed policy of the Government to withdraw from the non-strategicsectors and accordingly the public sector undertakings are being privatised in a phasedmanner.

Public sector enterprises like the National Mineral Development Corporation, Kudremukh

Iron Ore company, Steel Authority of India Limited and Orissa Mining Corporation dominatethe iron ore sector.

National Aluminium Company contributes about 35% bauxite mining and aluminium

production. Hindustan Copper Limited predominates the copper ore mining sector.

After cessation of economic operations in Bharat Gold Mines Limited since 2000, Hutti GoldMines Limited (a Government of Karnataka undertaking), is the only undertaking engaged in

the mining of gold. Rajasthan State Mines and Minerals Limited and Andhra Pradesh Mining

Development Corporation predominate the mining of rock phosphate and barytesrespectively.

Coal Mining is predominantly a public sector activity - Coal India Ltd. (CIL) accounts for85% of total coal production

Role of the Government

The Mines and Minerals (Development and Regulation) Act, 1957, (MMDR) and the Mines

Act, 1952, together with the rules and regulations under them constitute the basic lawsgoverning the mining sector. Further, the Government has formulated the National Mineral

Policy, which was revised in 1994 to permit private investment in exploration andexploitation of 13 specified minerals.

In 1999, the foreign investment policy has been further liberalized to promote Foreign

Direct Investment (FDI) in the mining sector:

* For exploration and mining of diamonds and precious stones, FDI upto 74 percent ispermitted under automatic route.

* For exploration and mining of gold and silver and minerals other than diamonds andprecious stones, FDI is allowed upto 100 percent under automatic route.

* For metallurgy and processing, FDI is permitted upto 100 percent under automatic route.

* Private Indian Companies setting up/operating power projects as well as coal and lignite

mines for captive consumption are allowed FDI upto 100 percent.


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* 100 percent FDI is allowed for setting up coal processing plants subject to the conditionthat the company shall not do coal mining and shall not sell washed coal or sized coal from

its coal processing plants in the open market and shall supply the washed or sized coal tothose parties who are supplying raw coal to coal processing plants for washing or sizing.

* For FDI proposals not meeting the above mentioned guidelines, approval will be given by

the Foreign Investment Promotion Board keeping in mind parameters such as project size,commitment of external resources for funding project costs, the company's mining trackrecord and financial strength, level of technology and the India's Partner Equity holding

A SWOT Analysis of Indian Mining Industry

Strengths:

1. The government offers a wide range of concessions to investors in India, engaged inmining activity. The main concessions include, inter alia:

* Mining in specified backward districts is eligible for a complete tax holiday for a period of 5

years from commencement of production and a 30 percent tax holiday for 5 yearsthereafter.

* Environment protection equipment, pollution control equipment, energy saving equipmentand certain other equipment eligible for 100 percent depreciation.

* One tenth of the expenditure on prospecting or extracting or production of certain

minerals during five years ending with the first year of commercial production is allowed asa deduction from the total income.

* Export profits from specified minerals and ores are eligible for certain concessions underthe Income tax Act.

* Minerals in their finished form exempt from excise duty.

* Low customs duty on capital equipment used for minerals; on nickel, tin, pig iron,

unwrought aluminium.

* Capital goods imported for mining under EPCG scheme qualify for concessional customsduty subject to certain export obligation.

2. World's largest producer of mica; third largest producer of coal and lignite & barytes;ranks among the top producers of iron ore, bauxite, manganese ore and aluminium.

3. Labours easily available

4. Low labour and conversion costs

5. Large quantity of high quality reserves

6. Exports iron-ore to China and Japan on a large scale

7. Strategic location: Proximity to the developed European markets and fast-developingAsian markets for export of Steel, Aluminium


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Weakness:

Coal mining in India is associated with poor employee productivity. The output perminer per annum in India varies from 150 to 2,650 tonnes compared to an averageof around 12,000 tonnes in the U.S. and Australia; and

Historically, opencast mining has been favored over underground mining. This has

led to land degradation, environmental pollution and reduced quality of coal as ittends to get mixed with other matter;

India has still not been able to develop a comprehensive solution to deal with the flyash generated at coal power stations through use of Indian coal. Clean coaltechnologies, such as Integrated Gasification Combined Cycle, where the coal isconverted to gas, are available, but these are expensive and need modification to

suit Indian coal specifications.

Poor infrastructure facilities Mining technology is outdated Low innovation capabilities Labor force is highly un-skilled and inexperienced High rate of accidents Lack of R&D programs and training and development Most of the Indian mining companies do not have access to Indian capital market There is a lack of respect for the mining industry and it suffers from the incorrect

perception that ore deposits are depleted.

There is limited access to capital, and mines are increasingly more costly to find,acquire, develop and produce.

There are long lead times on production decisions. The Indian mining industry suffers from an out-dated, unattractive approach to

mining education that is partly to blame for insufficient human resources.

Improvement in operational efficiency of the mining companies - Miningcompanies are in need of an organizational transformation to gradually align itsoperating costs to international standards. Mining costs of Indian companies are at

least 35 percent higher than those of leading coal exporting countries such as

Australia, Indonesia, and South Africa. To match productivity, they will need toinvest in new technologies, improve processes in planning and execution of projects,

and institutionalize a comprehensive risk management framework.

Mining operations are not environment friendly. Least importance is given toenvironment concerns.

High rate of illegal mining

The Opportunities

India has an estimated 85 billion tonnes of mineral reserves remaining to be exploited.

Besides coal, oil and gas reserves, the mineral inventory in India includes 13,000 deposits/prospects of 61 non-fuel minerals. Expenditure outlay on mining is a meager sum when

compared to other competing emerging mining markets and the investment gap is mostlikely to be covered by the private sector. India welcomes joint ventures between foreign

and domestic partners to mobilise finances and technology and secure access to globalmarkets.

Potential areas for exploration ventures include gold, diamond, copper, lead, zinc,nickel, cobalt, molybdenum, lithium, tin, tungsten, silver, platinum group of metals

and other rare metals, chromite and manganese ore, and fertiliser minerals.


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The main opportunities in the mining sector (excluding coal and industrial minerals)are in the development and production of surplus commodities such as iron ore and

bauxite, mica, potash, few low-grade ores, mining of small gold deposits,development of placer gold resources located on the frontal belt of the Himalayas,mining known deposits of economic and marginal categories such as base metals inBihar and Rajasthan and exploitation of laterite for nickels in Orissa, molybdenum in

Tamil Nadu and tin in Haryana. Considerable potential exists for setting up manufacturing units for value added

products.

There exists considerable opportunities for future discoveries of sub-surface depositswith the application of modern techniques.

Current economic mining practices are generally limited to depths of 300 meters and25 percent of the reserves of the country are beyond this depth

Strengthening of logistics in coal distribution - In India, the logisticsinfrastructure such as ports and railways are overburdened and costly and act as

bottlenecks in development of free market. Privatization of ports may bring theneeded efficiencies and capacities. In addition, capacity addition by the Indian

Railways is necessary to increase freight capacity from the coal producing regions todemand centers in the northern and central parts of the country. On the Indian rail

network, freight trains get a lower priority than passenger trains, a problem thatpromotes delays and inefficiency. Special freight corridors would raise speeds, cutcosts, and increase the system's reliability.

Focusing on technology for future - India's numerous technology researchinstitutes are working on energy related R&D. However, there is a possibility that

they are operating in a fragmented fashion. The Government may get improvedrecoveries on its investment by concentrating on few important technology areas. To

start with focus may be applied for tighter emission standards and development ofinexpensive clean-coal technologies viz. extraction of methane from coal deposits.

Estimated 82 billion tonnes of reserves of various metals yet to be tapped While India has 7.5% of the world's total bauxite deposits, aluminium production

capacity is only 3% of world capacity, indicating the scope and need for new

capacities

Threats:

Foreign Investment in the Mining Sector

During 1999, the Government had cleared 7 more proposals of leading international

mining companies for prospecting and exploration in the mineral sector to the tuneof US$ 62.5 million. 65 licenses have been issued till date for prospecting an area ofaround 90,142 sqkms in the states of Rajasthan, Maharashtra, Gujarat, Bihar,

Haryana and Madhya Pradesh. Prospecting licenses have been granted in favour ofIndian subsidiaries of well-known mining companies. These include BHP Minerals,

CRA Exploration supported by Rio Tinto (RTZ-CRA), Phelps Dodge of USA, MetminFinance and Holding supported by Metdist Group of Companies UK, Meridien Minerals

of Canada, RBW Mineral Industries supported by White Tiger Resources of Australia,etc.

Large integrated international metal manufacturers including POSCO, Mittal Steeland Alcan have announced plans for expansion in India

Mining companies and equipment suppliers are under the constant threat of beingtaken over by foreign companies.


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A heavy tax burden discourages further investment. Politicians undervalue the industry's contributions to the economy. Stricter environment rules restricting mining activities

Porters five force analysis

Threat of New Entrants: Before the breakup of the De Beers monopoly, it was

virtually impossible for new entrants to jump into the industry. With forced change in

business practices, stronger implementation of laws and discovery of diamonds in areas

outside of the De Beers scope of control, competition has now increased in the market.

There is now room for about 3 more major players and several smaller niche operators

who often consolidate and manage to compete in smaller segments.

Bargaining Power of Buyers: Historically, consumers had no control over the

diamond industry, its pricing and supply. With an economic downturn in the industry,

there was reduction in demand which lead to an oversupply problem and reduced

prices. To address this, major companies reduced mining operations and turned the

industry back to its higher demand lower supply model. Once again, the buyers power is

non-existent in this industry.

Bargaining Power of Suppliers

The bargaining power of suppliers in the mining equipments manufacturing industry is low as rawmaterials consist mainly of basic commodities, steel and copper. Also, other supplies include basic

electrical components and equipments that go into the production of OEs. Bucyrus was able to increase

its gross margin in the period 20042009 by decreasing cost of sales by78.8% in 2004 down to 69.6% in

2009. In addition, raw materials costs are naturally hedged within the industry as Bucyruss customers

are their suppliers too. When commodity prices increase the companys sales increases as a result of

miners increasing production and investments in new machinery. On the other hand, during time of

decreasing commodity prices manufacturers rely more on aftermarket sales which provides lower costs.

Threat of Substitutes: The biggest threat to the diamond industry are from high

quality high tech synthetic diamonds. These directly impact the basis of the value of the

diamond, i.e. the customer perception of its rarity and value. The price of diamonds are

not a true indicator of their value or supply. But it is all in the perceptions of the

consumers. With synthetic diamonds, consumers will begin to challenge the diamond as


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a rare natural item and in some places they may overtake the sale of natural diamonds.

In addition, these are sustainable and not the result of invasive mining activities. They

are also easy to identify as not originating from a conflicted area. All these aspect make

the threat of substitutes a real one

Competitive Rivalry: In a change from previous industry structures, the broken

cartel now means that there is some competitive pressure from the industry. There are

still limited players, but overall, the increased presence of different companies means a

more competitive market.

Mrp Mining

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