India sets target of $210bn addition to GDP from mining, by 2025

KOLKATA (miningweekly.com) - India has set a target to add $210-billion to the country’s gross domestic product (GDP) from the mining and mineral sector by 2025, marking a growth of 12% a year.

A document titled, ‘Unlocking the Potential of the Indian Mineral Sector: A Strategy Paper’, prepared by the Mines Ministry said that the total increment to the GDP would help generate two-million additional direct jobs in the mining and mineral industry and another 11-million indirect jobs in the sector.

Reviewing the current performance of the mineral sector, the paper said, “performance has been poor both in input and output parameters compared to best practice mining economies like the US, Canada, Australia, China, Brazil and South Africa.”

“The contribution of mining to India’s GDP has been stagnant at 1.2% over the past one decade whereas contribution of the sector was 6% in Chile, 5.9% in Australia, 5.3% in South Africa and 2.9% in Chile.”

In terms of employment, a mere 0.3% of the population was engaged in the Indian mining sector, which compared poorly with 3.8% in South Africa and 1.4% in Chile. In addition, employment growth in this sector has been stagnant at 3% for the last ten years, the document noted.

Outlining the performance based on input parameters, it observed that India’s spend on exploration was extremely low, at 0.3% of the global spend compared with 19% in Canada and 12% in Australia.

Exploration in India was also restricted to depths of between 50 m and 100 m, whereas internationally exploration were conducted as deep as 500 m, which though currently a negative could be the major driver for securing incremental raw material mineral resources in the country.

One of the major impediments to growth of the mining sector was that it took between five to eight years, and in some cases even longer to secure a mining lease in India compared with just a year in Australia.

Logistical inefficiencies leading to losses in the mining sector has been estimated at $2-billion, almost double the losses in the case of other manufacturing sectors in the country.

Recommending exploration for and expansion of the resource base and reserves of minerals like bauxite, iron-ore, lead and zinc, the report suggests that the Geological Survey of India (GSI) set aside $76-million a year for more intensive survey activities.

The GSI should drive the majority of these surveys by hiring private geosurvey organisations to increase geophysical and geochemical baseline data from the current 3% to 4% of the landmass to 30% over the next five years.

Baseline data generated would continue to be owned by GSI and not private agencies. Countries like Australia which have 100% coverage of baseline data have witnessed $5 of private investments for every dollar spent by government in precompetitive geoscientific data.

As advocated in the National Mineral Policy 2008 and proposed in the Mineral and Metal Development and Regulatory Bill, currently before the Parliament, a composite High Technology Reconnaissance and Exploration Licence was planned to boost exploration of deeper concealed minerals like copper, lead, zinc and noble metals.

The strategy paper comes against the backdrop of the economy growing at its slowest pace in two years during the quarter ended September 2011 at just 6.9%, down from 8.4% during the previous corresponding quarter.

Manufacturing growth dipped to 2.7% during the quarter from 7.2% and the mining and quarrying sector registered a degrowth of a negative 2.9% against a positive growth of 1.8% during the previous corresponding quarter.