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Government must acknowledge the risks related to mining ventures and work with the stakeholders to solve the issues, according to professional services firm EY.
“The new set of regulations introduced by the government, including the Coal Mines (Special Provisions) Act and the Mineral Auction Rules 2015, coupled with a transparent, non-discriminatory process for auctions are expected to shape the industry for the next half a century.
“It is therefore, imperative to look at the mining ecosystem as a whole, and ensure that government and industry work together to ensure a steady and robust future for the industry,” said Anjani Agrawal, Partner and Leader – Metals and Mining, EY, while addressing ‘Mining Mazma’, a three-day convention organised by the Federation of Indian Mineral Industries.
EY released a report titled ‘Mineral concessions framework — imperative for success’, which, among other things, outlines the different areas government should consider before auctioning mining licences, as also the strategies bidders could look at while bidding for mines.
Anjani Agrawal, the author of the report, said: “It (report) analyses the current policy framework, and suggests areas that need reconsideration by the government, and help achieve the objectives of socioeconomic growth using the mining industry as a lever.”
According to the report, some of the issues the government should pay attention to include: synergy between industrialisation goals, balancing captive and merchant mining, reservations for government companies, and capacity building at the State level for successful auctions.
A Ministry of Mines report states that the recently introduced regulations intend to provide an auction-based fair, transparent and non-discriminatory process for awarding mining concessions.
These policies empower States in several ways. With this, royalty contribution from the mining industry is expected to shoot up to ₹13,300 crore in FY16, a 50 per cent increase from that in FY12 .
The newly introduced revenue-share-based auction model makes the State (and all its arms, representatives) a true partner over the life of the concession and hence, calls for a fundamental shift to a mindset of a collaborating partner.
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