JOHANNESBURG (miningweekly.com) – The Indian government is planning changes in the country’s mining legislation that will make it easier for foreign investors to enter into joint ventures (JVs) with Indian companies.
Currently, a foreign investor can only form one JV in India for each specific mineral or metal – thus, only one copper JV, one gold JV, and so on, unless it gets special permission from the Foreign Investment Promotion Board of the Ministry of Finance.
Moreover, the current regulations require that, every time a foreign company wishes to enter into a mining JV with a local company, it must make a formal declaration to the government that it does not have another JV operating in that sector of the Indian mining industry.
These processes are sufficiently bureaucratic and time-consuming that they have hindered foreign direct investment (FDI) in the Indian mining industry. Between 2000 and 2007, FDI in mining amounted to some $510-million, which was less than 1% of the total FDI into India during that time.
Oddly, perhaps, there are no restrictions on foreign mining companies seeking to develop wholly-owned operations in India in many metals and minerals, including gold, silver and diamonds, as well as coal (provided it is to be supplied to “captive” customers such as power stations, cement plants and steel works) but excluding titanium. However, foreign mining houses can apply for permission from the Indian government to set up 100%-owned titanium operations in the country.
The consequence of this situation has been that international mining groups have been unable to properly benefit from local knowledge and Indian juniors have been hampered in getting access to funding and access to international markets. Indeed, the Financial Express of New Delhi has pointed out that none of the major multinational mining groups has yet announced any large-scale investments in India.
On Thursday, the paper reported that Indian junior and foreign multinational miners had both been urging that the restriction on FDI in JVs be abolished. This, the paper added, will now happen. It quoted a statement by the country’s Ministry of Mines that “there is no reason for holding back [JV] proposals for such [no other JV in that sector] declarations”.