Over 90% of mineral resources in India unexplored: EY report
Bangalore, 5 September 2011 – With only one major agency hitherto engaged for exploration at the national level, India has, till date, explored only 7-9% of the mineral resources as against almost 100% geophysical and geochemical surveys in countries such as Australia. This was revealed in a report titled ‘Exploring India: Mining the Opportunities’ launched by EY at a conference organized by the Federation of Indian Mineral Industries in Bangalore.
Speaking on the report, Anjani Agrawal, Partner and National Leader, Metals & Mining, EY India, said, “Limited resources for exploration activity and relatively complex mining policy environment have constrained the survey and exploration activities. Resource nationalism, which is picking up across the globe, may actually turn out be a silver lining for the domestic mining industry if dealt with judiciously. India is largely unexplored and, therefore, it offers good opportunities for mining exploration & development companies to be a part of the Indian growth story for the next decade.”
The mining scenario in India for various metals, mineral exploration in India, policies and regulations, opportunities in mining sector, key challenges faced by the industry and recommendations for making this sector an integral part of India’s growth story in the future are some of the key topics covered in the report.
The report observes & analyses some of the key challenges that the Indian mining industry is facing today - lack of investments in exploration, inadequate information on resource inventory and tenements, unattractive taxation regime for exploration, resistance from host communities, under developed risk capital market and insufficient participation from global mining community.
However, the report reckons that, despite the challenges, India is a land of untapped potential. According to the report, with a growing economy, domestic demand for metals will be resilient and currently supply falls short of demand in various minerals. Potential areas of exploration thrust include gold, diamond, copper, lead, nickel, cobalt, molybdenum, lithium, silver, platinum group of metals, rare earths, rock phosphate etc.
The report suggests that to unlock the potential, all the stakeholders need to consider, inter alia:
- Increased government support to the exploration agencies
- Promote contract mining by specialists
- Identify & agree on special mining regions
- Develop Special Purpose Vehicles
- Improve logistics and supply chain network
- Minerals taxation reforms
- Facilitating environment for raising risk capital for exploration business
- Forge strategic alliances between miners, infrastructure players, technology and equipment suppliers and financiers (including infrastructure financing)
- Judicious view on resource nationalism
“The growth in Indian GDP suggests that the country will be a US$2 trillion economy in the near future. However, compared with other economies of this size with comparable mining reserves, India has a very large ground to cover to meet its domestic demand. Globally economic power has shifted to resource ownership and margins are moving upstream in this industry. The mining sector along-with downstream value creation can be leveraged bring socio-economic development to remote regions of the country while also improving balance of trade and inflation,”said Anjani Agarwal. “Right policy implementation along with good governance and improved stake holders engagement, can help harvesting the true mineral potential of India.”
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