KOLKATA (miningweekly.com) – In view of the Indian government’s proposal to implement paradigm shifts in the mining policy regime, several domestic mineral processing companies have started toying with options of entering merchant mining or float arms to offer mine developer operator (MDO) services to new investors.

Several domestic minerals processing companies have expressed an interest in spreading their mining operations beyond captive production, triggered by recent government policy proposals, including the opening up of coal mining for commercial production by independent investors and bringing coking coal production under the administrative control of the Steel Ministry, instead of the Coal Ministry, which currently facilitates coking coal production.

Though the companies are not willing to officially provide details, considering that these changes are still at an embryonic stage, information culled from government and company sources indicates that the country’s largest power producer, NTPC Limited; integrated aluminium producer the National Aluminium Company Limited (Nalco); integrated copper refiner Hindustan Copper Limited (HCL); and the country’s largest steel producer, government-owned Steel Authority of India Limited (SAIL), have all been chalking out plans to extend their existing mining operations to become mining service providers or MDOs.

In a first move towards such an objective, government-owned companies Nalco, HCL and Mineral Exploration Corporation Limited have already floated a three-way joint venture to take up exploration and exploitation of strategic resources, as well as globally source minerals scarcely available domestically.

Sources say that, since these three companies have extensive experience in exploration and operating their own mining ventures, they are well placed to offer mining services, demand for which is expected to rise with the opening up of the sector for new entrants.

Similarly, the government has floated the idea of shifting coking coal mining from the Coal Ministry to the Steel Ministry for a more integrated development of coking coal assets since steel companies were the primary users of the dry fuel.

In the long term, such a shift in administrative control would aim to push domestic steel companies to enter into coking coal exploration and development instead of relying solely on Coal India Limited (CIL), as is presently the case.

It has been pointed out that, since the cost of coking coal production was almost the same as the landed price of imported coking coal, the domestic miner did not have any incentive to step up investments in production.

However, considering that it is a critical raw material for the heavily import-dependent domestic steel mills, the latter would be a more efficient producer of domestic coking coal.

Under such a scenario, SAIL, with its experience in operating its own captive coking coal blocks and being ranked the second-largest miner in the country, after CIL, the steel producer could leverage its mining operations to extend mining services to steel plants that do not have captive iron-ore or coal mines and, hence, little experience in mining, the sources added.

Along the same lines, NTPC Limited is also planning a separate mining division within the company to undertake its captive coal mining projects, having already bagged ten captive coal blocks that over the years would bring into production an estimated 107-million tons of dry fuel to feed its thermal power plants.

Extending its mining arm to undertake mining projects of other entities across the country could also be an option for the power producer, say sources.