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Mines ministry mulling game plan to achieve 22% production growth

 

Date | Aug 24, 2016:

In an attempt to add one percentage point to the country’s gross domestic product (GDP), India’s ministry of mines has come up with an action plan that proposes to raise annual mineral production by 21-22% till 2020 to achieve the goal.

 

Currently, mining contributes around 2-2.5% to India’s GDP with the Bharatiya Janata Party-led government projecting a GDP growth of 7-7.75% for the current financial year.

 

The action plan, to be presented before mines minister Piyush Goyal, also voices concerns regarding fuel minerals such as coal occupying the maximum share of around 58% in the mining index. In comparison, minor minerals such as gravel and limestone have only 18% share followed by major minerals, including iron ore, bauxite, copper, lead, zinc and manganese, having a 14% share in the mining index.

 

“We have prepared a detailed action plan for increasing the country’s mineral production in the next four years and will soon present it before the minister. Thrust has been laid in auctioning of 100 mineral blocks in the near future, as well as opening up of closed mines,” said a senior government official who did not want to be named.

 

This comes at a time when the National Democratic Alliance (NDA) government, credited with setting up a template for natural resource allocation in India, aims to speed up auction processes across the states to increase mineral production.

 

Soon after taking charge as India’s mines minister on 6 July, Goyal had called for setting production targets for various minerals and directed the mines ministry officials to prepare a roadmap.

 

Currently, there are about 3,844 operational mining leases, out of which only 1,800 are functional. As for the rest, operations have been stalled due to legal problems, renewal issues or other such hurdles, the official added.

 

InfraCircle had earlier reported the government is trying to bridge the gap between actual mineral production and the estimated capacity as per the approved mining plan. In case of iron ore, the estimated capacity stands at 308 million tonne (MT) compared with the actual capacity of 155MT.

 

A second government official, requesting anonymity, said mineral production can increase significantly when the pending mining leases under section 10A(2)(c) of the Mines and Minerals (Development and Regulation) Act, 2015 are cleared.

 

InfraCircle on 10 May reported the country’s mineral production for financial year 2015-16 increased by 9% to 495MT. However, the overall growth in terms of value decelerated by 11% to Rs.39,767.3 crore during the same period.

 

With India’s GDP expected to grow by around 8% in the coming years, the mineral sector may reach around Rs.7 trillion by 2019-20, the official added.

 

According to data available on the website of the mines ministry, the size of the mineral sector for year 2014-15 is provisionally estimated at Rs.2.75 trillion.

 

Experts, however, think that there is no point in increasing production of minerals unless the economy is ready to consume it.

 

“There is no use of producing minerals until and unless there is demand. Also, a lot of economic criteria will be involved when it comes to opening those closed mines as a majority of them are small in size and not economically viable. Moreover, resources available in the bigger mines have either been exhausted or will require heavy investment for exploring deep-seated minerals,” said S. Vijay Kumar, former mines secretary.

 

Queries emailed to the ministry of mines spokesperson on 22 August remained unanswered.

 

Despite a dip in commodity prices globally, India’s overall mineral production during the first quarter of the current financial year has gone up 14% to 138.53MT compared with 121.11MT during the corresponding April-June period last year.

 

 

(Source: http://www.vccircle.com/)