The Hindu Business Line : Pain points that the mining policy strikes at

Experts are touting the new Mining Policy, 2008 as something for everyone. After a long-drawn-out period (over two years), the new policy has seen the light of day. “The policy provides for a paradigm shift from the traditional conservationist approach to an ‘appropriate-use of resource’ approach,” says Nabin Ballodia, Director, KPMG India. How does the policy balance national and economic interests? Is it too open? Will it be tra nsparent?

To answers questions like these, Business Line interacted with Mr Ballodia. He answers the first query by saying that, overall, the new mining policy is expected to instil confidence in the investors — both local and international. Excerpts from the e-mail interaction:

First, list out some salient points of the new mining policy.

The new mining policy will promote:

Reduction in delays, increase in transparency and providing a level-playing field to all players.

Seamless transition from prospecting licence to mining licence and transferability of mineral concessions.

Encouraging competitive exploration using state-of-the-art technology and investment with introduction of two new concessions — Non-Exclusive Reconnaissance operations (NERP) and Large Area Prospecting Licence (LAPL).

Preference to value-adder and value-addition activities.

Promote growth of infrastructure in mining areas and the welfare of local community.

Ensure fair compensation to the State governments.

There has been a lot of talk going around about transparency. Do the new policy measures address those concerns?

Yes. One of the major pain points for mining players has been the lack of transparency and delay in the grant of concessions and approvals.

The new mining policy focusses on reduction in the delay in the grant of mineral concessions and provides for a level-playing field to all players in the sector.

The commitment of the Government to reduce delays and red-tapism in the concession allotment process shall instil greater confidence in the investors and enhanced investment in the sector.

Would like to draw your attention to the licences, specifically with respect to mining — Have the new measures made these easier? What were the problems earlier?

The new policy also provides for seamless transition from prospecting licence to mining licence. Earlier, even after spending huge amounts in the exploration phase, mining companies were unsure of obtaining the licence — though they were given preferential treatment for such licences.

However, the new policy provides for automatic eligibility for mining licence based on successful exploration activity.

Any concessions given to entities taking up mining?

The new policy provides for transferability of concessions which shall play an important role in the development of the mining sector. These measures provide greater certainty to the exploration company regarding the mining licence for the right to exploit the mineral resources successfully explored by it.

With all these measures being taken, wastage may also go up. Minerals are expensive and practically impossible to ‘manufacture’. How does the government plan to deal with the apprehension?

The policy speaks of zero-waste mining as the national goal and the use of the latest technology to maximise extraction of minerals.

To expedite the completion of reconnaissance work in the country, an open sky policy for non-exclusive right for reconnaissance work is being adopted.

For large areas requiring substantial risk investment and advanced technology, a new concession in the form of LAPL has been mooted. Global experiences have show that use of advanced technology not only increases the production of minerals but also leads to reduction in cost of mining.

Hence, these measures would not only encourage use of advanced technology for mining activities in India but would also enable the investors to reap the advantages of economies of scale and better exploitation of resources, both financial as well as technical.

Anything in the policy that benefits manufacturers?

Value-addition activities have been given a preferential treatment in the new policy. The enhanced focus is likely to result in backward and forward linkage and integration of the mining industry with the manufacturing industry.

We have seen how local people have objected to mining. Environment danger and hazards to human life have been written about and, also, the lack of infrastructure growth. Are these concerns handled?

The new policy focuses on growth of infrastructure around the mining site which, in turn, is expected to promote public private participation in a big manner. This will not only provide an impetus to the mining sector but will contribute to the overall development of the nation.

The new policy also stresses on the welfare of the local community around the mining areas and saddles the players in this sector with additional responsibilities.

It also provides for proper relocation and rehabilitation of the population around the mining area after the closure of the mines. These measures are likely to inculcate enhanced corporate social responsibility amongst the mining players and welfare of the local community in general.

Some mineral-states have historically complained about them not receiving enough in relation to what they have given. Any policy initiatives on this grievance?

Appropriate compensation to the States for the minerals extracted is high on the agenda of the new mining policy. Towards this, the royalty structure for mineral extraction is proposed to be modified. Further, the policy also aims at minimising illegal mining. These measures are likely to ensure that the States get a fair share on account of the minerals extracted from their jurisdiction. Moreover, the curbing of illegal mining should go a long way to check extraction of unaccounted minerals that do not result in any revenue for the relevant States.

So, overall, what are the benefits that would be brought by the new mining policy, if accepted in its present form?

The new mining policy is expected to infuse confidence in the investors — both local and international. It is likely to attract huge foreign direct investment (FDI) in the sector and is also expected to promote private participation in this sector. Attraction of FDI is expected to come along with latest technology for exploration and exploitation of minerals, which shall increase production and reduce the overall cost of producing minerals in the country.

D. MURALI

KUMAR SHANKAR ROY

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