Diamonds aren't forever. Just ask John J. Teeling, executive
chairman of Dublin-based exploration company African
Diamonds. During a panel discussion on mining and natural
resources at the recent Wharton Global Alumni Forum in Cape
Town, South Africa, Teeling told the audience that despite its
storied past as a leader in gold and diamond production, South
Africa "is mined out."
Teeling, whose company is currently co-developing a large
discovery in Botswana with South African diamond giant De
Beers, said that of the 12 mining operations he has started since
1983, seven are in Africa -- including in Mozambique,
Zimbabwe and Sierra Leone -- but none are in South Africa.
"We go where the opportunities are, geologically," he said. "If
there's no geology, you cannot have a mine." South Africa,
which began mining diamonds in 1867 and gold in 1887, has
seen its resources depleted over time, while rising stars like
neighboring Botswana have moved into the mining spotlight. Globally, the competition is rising as well:
After being the leader in gold production for more than a century, South Africa lost its seat to China in
2007. "The future large discoveries in Africa are not going to be found in South Africa," Teeling said.
Other panelists disagreed with Teeling's assessment of South Africa's future mining prospects, citing new
technology that can extend the life of older mines. Indeed, the consensus was strong that mining will
continue to play a major economic role throughout Africa, as emerging markets like China and India fuel
a long-term commodity "super cycle" and African nations learn to contend with the so-called "resource
curse," or the inability to extract value from their abundant natural resources.
Like any industry that has endured for more than a century, mining in South Africa has had its share of
problems. Teeling alluded to the historic difficulty of obtaining permits -- "it took years to get them" --
and recent changes regarding the terms of mining titles, which are now under government control. (In the
previous regime, titles were under mixed public and private ownership.) And earlier this year, the
industry was forced to a standstill by rolling blackouts caused by a national electrical system
overburdened by the massive demand from post-Apartheid urban development. (Eskom, the state-owned
power supplier, has said it will take at least five to seven years to correct the problem by building new
coal and nuclear power plants.)
Despite these hurdles, mining remains the top industry in South Africa. Wharton marketing professor David Reibstein
David Reibstein, who moderated the panel, noted that mining is the country's biggest employer: a
half-million people are employed directly by mines and another 400,000 indirectly through associated
services like shipping. South African mines produce nearly 90% of the world's platinum, 80% of
manganese, 73% of chrome and -- despite its recent slip in position -- 43% of the world's gold. Mining
overall contributed 7% to South Africa's GDP in 2006. When adjusted for associated services and
additional industry output, such as electricity production, the total rises to 18.4%.
Thursday, October 30, 2008
Wednesday, September 3, 2008
A mining course on "Safe Mining: Methods,Design and Technology
Department of Mining Engineering
Indian Institute of Technology, Kharagpur
Directorate-General of Mines Safety
Mandated
Short Term Course
On
“Safe Mining: Methods, Design and Technology”
Continuous Education is the touchstone of employee productivity. Mr.B.P.Singh, Director of Mines Safety ( S&T),DGMS, Dhanbad writes ,” This is very essential to impart theoretical as well as practical knowledge and information about mining methods and technology including safety and productivity to every practicing mining professional from time to time”
As both underground and surface mining goes dipper and dipper into difficult deposits it is now important once again to reiterate that the principles of safe mining methods remain of great importance. With this in mind the Department of Mining Engineering, IIT, Kharagpur in co-operation with Directorate General of Mines Safety, Dhanbad has designed a short term course for the executives of the mining industry “Safe Mining: Methods, Designs and Technology” to be held at the Department of Mining Engineering, IIT, Kharagpur on 9th to 11 thDec’2008.
Topics:
1. Safe Mine Design: Pillar, slope, structure, embankments design principles and safety factor calculation.
2. Mine Safety: Operational safety, assessment, safe practices etc.
3. Mining Methods: Surface and Underground methods Design, operation, performance, safety assessment.
4. Mine Climate: Influence of air, dust, rain and water on safety.
5. Mining Technology: Mine Supports, safety devices, automatic alarm systems.
6. Equipment Management: Maintenance and service assessment methods and technology.
7. Mine Legislations and Safety
Course Fee:
Fees paid on or before 11th Dec,2008
• Individual : Rs.10,000=00 ( Rs. Ten Thousands Only)
• Group ( not less than 5 individuals) : Rs.8000=00 per individual ( Rs. Eight Thousands only )
Fees paid after 11th Dec,2008
• Individual : Rs.12,000=00 ( Rs. Twelve Thousands Only)
• Group ( not less than 5 individuals) : Rs.10,000=00 per individual ( Rs. Ten Thousands only )
The course is non-residential in nature. Guest House booking will be done by IIT, Kharagpur on request. To avoid disappointment, please book early.
Sponsorship and Fees:
• Platinum Sponsor: Rs. 50,000.00 ( 3 complimentary delegates from the sponsor for free).Sponsors get all sessions premium showcasing.
• Gold Sponsor: Rs, 40,000.00 ( 2 complimentary delegates from the sponsor for free) .Sponsors get selective sessions premium showcasing.
Souvenir:
The course material comprising notes of the speakers will be made in the form of a souvenir for the participants. The souvenir copies will be sent to all the mining companies. The advertisements are being requested for the souvenir at the following rate:
• Back full page advertisement : Rs.6000.00
• Full page advertisement: Rs.3000.00
• Half page advertisement : Rs. 1800.00
• Quarter page advertisement: Rs. 1000.
Payment Mode
All the payments has to be made in bank draft in favour of “CEP-STC, IIT, Kharagpur”, payable at Syndicate Bank, IIT, Campus, Kharagpur.
Faculty:
The eminent faculty of Directorate General of Mines Safety (DGMS), IIT, Kharagpur, and personnel from the industry will conduct the lectures and demonstration.
About the convener:
Dr. Jayanta Bhattacharya, FNAE is a professor of standing in Mining Engineering. He has 6 books and more than 100 technical papers in many national and international journals.
Address for Communications:
Prof. Jayanta Bhattacharya
Head, Department of Mining Engineering and Convener
Department of Mining Engineering
Indian Institute of Technology, Kharagpur-721302.INDIA
Phone: +3222 278159,+3222 283702,+3222 283703
Fax: +322255303/+3222 282282. Mobile: +9434034354
E-mail: jayantaism@gmail.com
Indian Institute of Technology, Kharagpur
Directorate-General of Mines Safety
Mandated
Short Term Course
On
“Safe Mining: Methods, Design and Technology”
Continuous Education is the touchstone of employee productivity. Mr.B.P.Singh, Director of Mines Safety ( S&T),DGMS, Dhanbad writes ,” This is very essential to impart theoretical as well as practical knowledge and information about mining methods and technology including safety and productivity to every practicing mining professional from time to time”
As both underground and surface mining goes dipper and dipper into difficult deposits it is now important once again to reiterate that the principles of safe mining methods remain of great importance. With this in mind the Department of Mining Engineering, IIT, Kharagpur in co-operation with Directorate General of Mines Safety, Dhanbad has designed a short term course for the executives of the mining industry “Safe Mining: Methods, Designs and Technology” to be held at the Department of Mining Engineering, IIT, Kharagpur on 9th to 11 thDec’2008.
Topics:
1. Safe Mine Design: Pillar, slope, structure, embankments design principles and safety factor calculation.
2. Mine Safety: Operational safety, assessment, safe practices etc.
3. Mining Methods: Surface and Underground methods Design, operation, performance, safety assessment.
4. Mine Climate: Influence of air, dust, rain and water on safety.
5. Mining Technology: Mine Supports, safety devices, automatic alarm systems.
6. Equipment Management: Maintenance and service assessment methods and technology.
7. Mine Legislations and Safety
Course Fee:
Fees paid on or before 11th Dec,2008
• Individual : Rs.10,000=00 ( Rs. Ten Thousands Only)
• Group ( not less than 5 individuals) : Rs.8000=00 per individual ( Rs. Eight Thousands only )
Fees paid after 11th Dec,2008
• Individual : Rs.12,000=00 ( Rs. Twelve Thousands Only)
• Group ( not less than 5 individuals) : Rs.10,000=00 per individual ( Rs. Ten Thousands only )
The course is non-residential in nature. Guest House booking will be done by IIT, Kharagpur on request. To avoid disappointment, please book early.
Sponsorship and Fees:
• Platinum Sponsor: Rs. 50,000.00 ( 3 complimentary delegates from the sponsor for free).Sponsors get all sessions premium showcasing.
• Gold Sponsor: Rs, 40,000.00 ( 2 complimentary delegates from the sponsor for free) .Sponsors get selective sessions premium showcasing.
Souvenir:
The course material comprising notes of the speakers will be made in the form of a souvenir for the participants. The souvenir copies will be sent to all the mining companies. The advertisements are being requested for the souvenir at the following rate:
• Back full page advertisement : Rs.6000.00
• Full page advertisement: Rs.3000.00
• Half page advertisement : Rs. 1800.00
• Quarter page advertisement: Rs. 1000.
Payment Mode
All the payments has to be made in bank draft in favour of “CEP-STC, IIT, Kharagpur”, payable at Syndicate Bank, IIT, Campus, Kharagpur.
Faculty:
The eminent faculty of Directorate General of Mines Safety (DGMS), IIT, Kharagpur, and personnel from the industry will conduct the lectures and demonstration.
About the convener:
Dr. Jayanta Bhattacharya, FNAE is a professor of standing in Mining Engineering. He has 6 books and more than 100 technical papers in many national and international journals.
Address for Communications:
Prof. Jayanta Bhattacharya
Head, Department of Mining Engineering and Convener
Department of Mining Engineering
Indian Institute of Technology, Kharagpur-721302.INDIA
Phone: +3222 278159,+3222 283702,+3222 283703
Fax: +322255303/+3222 282282. Mobile: +9434034354
E-mail: jayantaism@gmail.com
Thursday, June 26, 2008
Minerals and Mining : What to read in inflation and recession
Inflation is about a context when more money in the market than the products that can be bought with.Simply, today there is higher demand of food than the money in supply.So you will require more money to buy less and lesser food.Inflation depends on the basic materials like food.
The free economy works on an optimism that the enterprises will able to sell the products to the customers who are temseleves optimistic that they can get consistent supply of money to buy them.If the optimism about the future evaporates then the producers wait with their wares to sell but the customers do not show up.Insecurity is the cause of any recession.
So few pointers for the mining industry:
1. Cost cutting not compromising competitiveness is a way forward.
2. Invest in spurring demand.
3. Rationalise the production so as to work on the stock and respond adequately.
For rest of the pointers write to me at jayantaism@gmail.com
The free economy works on an optimism that the enterprises will able to sell the products to the customers who are temseleves optimistic that they can get consistent supply of money to buy them.If the optimism about the future evaporates then the producers wait with their wares to sell but the customers do not show up.Insecurity is the cause of any recession.
So few pointers for the mining industry:
1. Cost cutting not compromising competitiveness is a way forward.
2. Invest in spurring demand.
3. Rationalise the production so as to work on the stock and respond adequately.
For rest of the pointers write to me at jayantaism@gmail.com
Sunday, June 22, 2008
New Realities for the Mining Companies
Consolidation of the mining sector through mergers and acquisitions is more inevitable than, perhaps, desirable. The popular feeling is that the stronger companies will be able to do the intensive exploration, do the research and development that is necessary, and also to be able to keep their profits up and share them with the host countries and people.
Today, top 150 mining houses make up less than 4% of the number of industry players but account for 80% of global metals output. As the influence increases due to increased merger and acquisition activity, there will however be an increased need for business monitoring for compliance. Competition also means the middle ground in the industry is being squeezed - large companies on one hand, juniors on the other, but the middle sized companies are being squeezed out of the equation.
The mining field is also changing with emerging markets and companies entering the race and changing the playing field. China and India are leading the charge but have only just begun. The desire for resources in these developing nations is continuing unabated and it is safe to say that metals are playing a major role in driving economic development in all types of economies. The developing nations are seeking the resources and the developed nations are feeling the pinch.
Not so long ago metals were not considered to be drivers in economic development but that is certainly not the case now. This has been a significant change in thinking.
Magnus Ericsson of Raw Materials Group of Sweden says: “This is really important to stress because it was only eight years ago that was questioned. It was thought that development could take place only through hamburgers and services and restaurants and things like that. That is not working in the Europe and the USA.” This change places the resource-rich countries in a strong position to service the developing nations but makes Europe and Japan in particular more vulnerable to being edged out.
It also means that the larger mining companies are well placed to continue to grow, particularly through mergers and acquisitions of smaller and mid-size players with key resource bases, as well as with their major competitors. And it is showing.
Mining industry merger and acquisition activity hit new levels in 2007 and is showing no sign of slowing down in 2008. A new report from PriceWaterhouseCoopers (PWC) says 2008 will be one of super consolidation, with the global credit crunch having little effect on mergers and acquisitions. The report states that in 2007 the number of mergers and acquisitions soared by 69%, from 1732 deals in 2006. The total transaction value was $US158.9 billion, up 18% on the previous year. Both the number of deals and their total value were more than double the level recorded two years earlier in 2005. "The number of mining deals announced in the fourth quarter of 2007 was more than double the level recorded in the corresponding quarter of 2006. The report says mergers and acquisitions are a way for mining companies to overcome record high exploration costs, protracted permitting processes and skills shortages. It points out that more than 90% of all deals involved transactions of less than $US250 million and the number of these doubled in the two years to 2007. In that period, the number of deals worth more than $US1 billion trebled to 25. Mining companies cannot afford to be bystanders in merger and acquisition activity. Deals are a key mechanism for filling the pipeline of development projects, bringing forward new development projects and diversifying corporate portfolios in terms of both commodities and geography. Underpinning these trends is the quest for world scale, resource acquisition and resource diversification. High commodity prices, buoyant market capitalizations and optimism about the industry's long-term growth and profitability, with sustained demand in Asia outstripping fluctuations in western demand, have seen mining companies embarking on ambitious long-term growth strategies.
The major 2007 deal was Rio Tinto's $US43 billion acquisition of Canada's Alcan while BHP Billiton's $US150 billion tilt at Rio Tinto will shatter all previous records, if successful. The report says there has been increasingly significant international moves by Russian and Chinese companies, with the intervention of Chinalco in the battle for Rio Tinto an example. North America, and in particular Canada, was still the primary focus for deals in 2007, with their number more than doubling from 310 in 2006 to 695. In the Asia Pacific, mining merger and acquisitions surged by 72% last year to 634 deals, with the total deal value up 216% to $US35.3 billion.
(Author Dr. Jayanta Bhattacharya, is Professor and Head,Department of Mining Engineering and Center for Educational Technology.Indian Institute of Technology, Kharagpur-721302,India. His home page and personal profile: http://jayantaism.googlepages.com/home, his books: http://jayantaism.tripod.com ,his new book on coal quality :http://jayantaism.tripod.com/coal-quality/ )
Today, top 150 mining houses make up less than 4% of the number of industry players but account for 80% of global metals output. As the influence increases due to increased merger and acquisition activity, there will however be an increased need for business monitoring for compliance. Competition also means the middle ground in the industry is being squeezed - large companies on one hand, juniors on the other, but the middle sized companies are being squeezed out of the equation.
The mining field is also changing with emerging markets and companies entering the race and changing the playing field. China and India are leading the charge but have only just begun. The desire for resources in these developing nations is continuing unabated and it is safe to say that metals are playing a major role in driving economic development in all types of economies. The developing nations are seeking the resources and the developed nations are feeling the pinch.
Not so long ago metals were not considered to be drivers in economic development but that is certainly not the case now. This has been a significant change in thinking.
Magnus Ericsson of Raw Materials Group of Sweden says: “This is really important to stress because it was only eight years ago that was questioned. It was thought that development could take place only through hamburgers and services and restaurants and things like that. That is not working in the Europe and the USA.” This change places the resource-rich countries in a strong position to service the developing nations but makes Europe and Japan in particular more vulnerable to being edged out.
It also means that the larger mining companies are well placed to continue to grow, particularly through mergers and acquisitions of smaller and mid-size players with key resource bases, as well as with their major competitors. And it is showing.
Mining industry merger and acquisition activity hit new levels in 2007 and is showing no sign of slowing down in 2008. A new report from PriceWaterhouseCoopers (PWC) says 2008 will be one of super consolidation, with the global credit crunch having little effect on mergers and acquisitions. The report states that in 2007 the number of mergers and acquisitions soared by 69%, from 1732 deals in 2006. The total transaction value was $US158.9 billion, up 18% on the previous year. Both the number of deals and their total value were more than double the level recorded two years earlier in 2005. "The number of mining deals announced in the fourth quarter of 2007 was more than double the level recorded in the corresponding quarter of 2006. The report says mergers and acquisitions are a way for mining companies to overcome record high exploration costs, protracted permitting processes and skills shortages. It points out that more than 90% of all deals involved transactions of less than $US250 million and the number of these doubled in the two years to 2007. In that period, the number of deals worth more than $US1 billion trebled to 25. Mining companies cannot afford to be bystanders in merger and acquisition activity. Deals are a key mechanism for filling the pipeline of development projects, bringing forward new development projects and diversifying corporate portfolios in terms of both commodities and geography. Underpinning these trends is the quest for world scale, resource acquisition and resource diversification. High commodity prices, buoyant market capitalizations and optimism about the industry's long-term growth and profitability, with sustained demand in Asia outstripping fluctuations in western demand, have seen mining companies embarking on ambitious long-term growth strategies.
The major 2007 deal was Rio Tinto's $US43 billion acquisition of Canada's Alcan while BHP Billiton's $US150 billion tilt at Rio Tinto will shatter all previous records, if successful. The report says there has been increasingly significant international moves by Russian and Chinese companies, with the intervention of Chinalco in the battle for Rio Tinto an example. North America, and in particular Canada, was still the primary focus for deals in 2007, with their number more than doubling from 310 in 2006 to 695. In the Asia Pacific, mining merger and acquisitions surged by 72% last year to 634 deals, with the total deal value up 216% to $US35.3 billion.
(Author Dr. Jayanta Bhattacharya, is Professor and Head,Department of Mining Engineering and Center for Educational Technology.Indian Institute of Technology, Kharagpur-721302,India. His home page and personal profile: http://jayantaism.googlepages.com/home, his books: http://jayantaism.tripod.com ,his new book on coal quality :http://jayantaism.tripod.com/coal-quality/ )
Saturday, May 17, 2008
Resource Industry in the New Economy
Indian School of Mines,Alumni Association,Kolkata Chapter has decided to organise a conference on " Challenges and Opportunities of the Mining ,Processing and Oil& Gas Industry in the New Economy". It surely owes an explanation to the community of the Geo resources industry as to what is "New Economy".Let me try to clear the air a bit.Economy per se is the method of exchanges of materials and services across the population and the value realised under dynamic supply -demand relationships.Old economy features in the resources sector were paper-based trading, stepped product and money transactions, man intensive operations , human intelligence-based support .On the other hand the evolving new economy features are: paper less computerized trading (e.g. online demat accounts), seamless product and money transactions ( online credit card purchases, hotel booking etc), intelligent machine based operations ( face reader password of Lenovo,finger readers) and machine intelligence based support ( Data mining, auto generated replies ,e.g., customer service by Citi Bank).The new economy carriers serve two things of the industry better than the old economy , i.e., scale and control. Since no industry can afford to ignore the absolute truth in any economy , i.e., either grow or perish, in competitive growth ,however it runs into the risk of lack of control.Today, with diverse and large scale competition the risk can only be averted ,if at all, by better information processing and the consequent actions the features of what we will know as the backbone of the new economy.
The conference will be in the format below:
ISMAA Triad Conference on Future Challenges and Opportunities in Mining,Oil/ Gas and Processing Industry
The concept is one of unifying all the existing branches in Georesources Industry .This will encourage all the professionals and the students to join the conference.
The scheme can be:
Total: 12 technical sessions.
3 simultaneous parallel sessions.
2 advertisers / sponsor sessions
Total sessions: 14
Duration: Two days.
Topics:
Mining:
Exploration and Geo-sciences.
Mining Technology
Mineral Trade and Commerce
Social Responsibility and the Environment.
Oil/Gas:
Oil/Gas Exploration and Geo-sciences.
Oilfield Technology.
Refinery and retailing.
Environmental Protection.
Processing:
Mineral Processing Technology.
Value Addition.
Business and Trade.
Clean and Green Processing.
The conference will be in the format below:
ISMAA Triad Conference on Future Challenges and Opportunities in Mining,Oil/ Gas and Processing Industry
The concept is one of unifying all the existing branches in Georesources Industry .This will encourage all the professionals and the students to join the conference.
The scheme can be:
Total: 12 technical sessions.
3 simultaneous parallel sessions.
2 advertisers / sponsor sessions
Total sessions: 14
Duration: Two days.
Topics:
Mining:
Exploration and Geo-sciences.
Mining Technology
Mineral Trade and Commerce
Social Responsibility and the Environment.
Oil/Gas:
Oil/Gas Exploration and Geo-sciences.
Oilfield Technology.
Refinery and retailing.
Environmental Protection.
Processing:
Mineral Processing Technology.
Value Addition.
Business and Trade.
Clean and Green Processing.
Thursday, April 17, 2008
Of Iron ore policy, small scale mining and devastation
The recent decision (2nd May ‘2007) of the Central Government to reduce the export duty on ore with iron content of below 62 per cent to Rs 50 per tonne will have injurious ramifications to the principles of mining and also on the community that thrives around the mining regions. This is an insult to the injury that the Indian Iron ore mining is plagued with even at a time when the prices are booming. The export levy would continue to be Rs 300 per tonne on iron ore rich beyond 62 percent. The impact is expected to be two fold. This has apparently been done to discourage the export of iron-rich ore and only make available value-add steel and iron products in the international market. Both, China and Japan have been protesting high export duties on iron ore levied by the Union Government. China, according to reports, threatened to boycott iron ore from India. The latest duty reduction may lead to softening up of China's stand vis-à-vis iron ore from India. But this points to few other very grave things. Has not our finance minister been tricked into this by the small scale iron ore mining lobby to a decision that would be a drag on royalty? What happens if some miners blend rich iron ore with the poorer one to keep the iron percentage below 62% to play hide and seek with the levy in connivance with some of our own people or even with the Chinese and Japanese. Can not one see the chuckle in the faces of the certifying officers in for a big time with the manipulation of reporting the grade values? What if high grade ores are passed as low grade ores with money changing hands? Such policies lend to the credos of short-sightedness of the government. These knee –jerk reactions from the ministry are bad for the industry. Can there not be a policy to encourage setting up of steel plants using below 62% grade Iron ore, even on a collaborative basis? Apparently, the policy seems to encourage small scale mining of poor grade ores. At the present, it is not a proper thing to do.
With the start of liberalization of Iron ore export , pocket mining of iron ores have increased in the sourthern and western tracts of India in an unprecedented scale. The scourge is now spreading in Goa. Hugely manipulated by the local mafia and politicos, the small reserves are squandered for profiteering in manners never seen before. A visit to the Bellary-Hospet region of Karnataka would open the eyes of anyone of the wanton destruction of small ore bodies in total disregard to the laws of mineral conservation and to the community of poor local inhabitants. Who are being benefitted: local mineral mafia, politicians and a handful of administrators. What distinction it has brought to the region. It is said, not without doubt though, that the region has the highest number of private aeroplane owners of the country. The fly by night operators do require them. Almost surely, the local people ,even if, are temporarily well-off but only to be trouped back to darkness once the small scale mining comes to an end.
Hence, such oblique encouragements to small scale Iron ore mining will be counterproductive in not very long run for the following reasons:
• Small scale mining by scope and size are unable to comply with basic rules of industrial safety, environmental upkeep and social responsibility.
• The ownership structure is so fragile that they can not be held for any impropriety.
• Such scale of mining does not lead to the development of any organizational culture. We must learn the lesson from licensing of small explosive manufacturers who all but devastated the culture of healthy explosives manufacturing and development.
• They are more exploitative of labor than large scale mining per se .
• Small scale mining can not have economies of scale. They would lack efficiency and enterprise, before long.
• Contrary to the popular belief, they do precious little to the sustainable development of a region. In fact, they care less.
• The mining practice followed is archetypal. They are not main stream mining and thus forever looked down upon by the professionals.
In an era of consolidation ,we must now think of small multi ore body single lease system to a solvent party than to distribute individual leases for each small ore body. The concept of small local ownerships is outdated, and does not do any good to anyone other than the owner.
The mining industry does not have a patient ear to listen to the NGOs. This is about the state of denial we are cocooned to. But for once , let us hear what Sunita Narain of Center of Science and
Environment, one credited with the findings of pesticides in cola, has to say about small scale Iron ore mining in Goa in one of her latest web offerings:
Industry has its own ways of 'persuading' local people. Everywhere I went, I heard tales of corruption and nepotism. The best tool seemed to be for local leaders-often panchayat heads-to first take people's
concern to the miners and then use this opposition to get lucrative contracts. The best going deal is in transportation. In all this, the local politician has been reduced to nothing more than a middleman-a
pimp for the miners to milk.
Are we with the community or against it ? Are we, the people of and around the minerals industry, losing sight of our own reasons of existence? Are we not responsible?
With the start of liberalization of Iron ore export , pocket mining of iron ores have increased in the sourthern and western tracts of India in an unprecedented scale. The scourge is now spreading in Goa. Hugely manipulated by the local mafia and politicos, the small reserves are squandered for profiteering in manners never seen before. A visit to the Bellary-Hospet region of Karnataka would open the eyes of anyone of the wanton destruction of small ore bodies in total disregard to the laws of mineral conservation and to the community of poor local inhabitants. Who are being benefitted: local mineral mafia, politicians and a handful of administrators. What distinction it has brought to the region. It is said, not without doubt though, that the region has the highest number of private aeroplane owners of the country. The fly by night operators do require them. Almost surely, the local people ,even if, are temporarily well-off but only to be trouped back to darkness once the small scale mining comes to an end.
Hence, such oblique encouragements to small scale Iron ore mining will be counterproductive in not very long run for the following reasons:
• Small scale mining by scope and size are unable to comply with basic rules of industrial safety, environmental upkeep and social responsibility.
• The ownership structure is so fragile that they can not be held for any impropriety.
• Such scale of mining does not lead to the development of any organizational culture. We must learn the lesson from licensing of small explosive manufacturers who all but devastated the culture of healthy explosives manufacturing and development.
• They are more exploitative of labor than large scale mining per se .
• Small scale mining can not have economies of scale. They would lack efficiency and enterprise, before long.
• Contrary to the popular belief, they do precious little to the sustainable development of a region. In fact, they care less.
• The mining practice followed is archetypal. They are not main stream mining and thus forever looked down upon by the professionals.
In an era of consolidation ,we must now think of small multi ore body single lease system to a solvent party than to distribute individual leases for each small ore body. The concept of small local ownerships is outdated, and does not do any good to anyone other than the owner.
The mining industry does not have a patient ear to listen to the NGOs. This is about the state of denial we are cocooned to. But for once , let us hear what Sunita Narain of Center of Science and
Environment, one credited with the findings of pesticides in cola, has to say about small scale Iron ore mining in Goa in one of her latest web offerings:
Industry has its own ways of 'persuading' local people. Everywhere I went, I heard tales of corruption and nepotism. The best tool seemed to be for local leaders-often panchayat heads-to first take people's
concern to the miners and then use this opposition to get lucrative contracts. The best going deal is in transportation. In all this, the local politician has been reduced to nothing more than a middleman-a
pimp for the miners to milk.
Are we with the community or against it ? Are we, the people of and around the minerals industry, losing sight of our own reasons of existence? Are we not responsible?
A Brief Review of the New Indian Mineral Policy: Will it change Indian Mining?
The new National Mineral Policy was introduced in the ensuing monsoon session of the Parliament and it will provide a single window clearance to foreign investors for mining projects in India. On 14th March, 2008 to boost to investment in the Indian mining sector — including foreign direct investment — the amendments to the Indian Mineral Policy were proposed. An amendment to make the required changes in the existing Mining Act will be introduced in the ongoing session of Parliament.
Hallmarks of a good policy document should hinge on four factors that it should espouse: efficiency, attractiveness, vision and responsibility. This mineral policy should also be discussed in the same light. In the following we will discuss some salient points of the policy with the critiques they deserve:
Trading Mineral Licenses
The government of India has allowed companies to trade mineral licenses freely. New policy would mean that companies interested only in prospecting need not undertake mining but sell the license to a company interested only in mining. The proposal has been included in the new mineral policy that was cleared by Cabinet on Thursday. The new policy has proposed a major change by way of decoupling mineral lease licenses. This would bring more focus as companies with expertise in prospecting need not undertake mining. They can sell their license to another company. The ministerial cabinet expects the change would allow flow of investments from South Africa, Canada and Australia where companies have shown interest in bringing their technical expertise required for identifying the potential of a mining block. Transfer of prospecting license is permitted by several countries. The international practice is being adopted here with the intent of bringing over $2 billion investment in the sector in the next few years. The move is expected to also result in better yields from mining blocks by use of better technologies. It will also encourage competition.
critique
A very welcome step considering the flexibility of investment that it deserves. For instance, out of a total 17,000 sq km of coal bearing area in the country, only 5,400 sq km is fully explored (8 holes per sq km) and another 12,000 sq km is regionally explored (1-2 holes per sq km). Every year, the total drilling requirement will be 1 million meter along with commensurate coring, sampling analysis and report preparation which involves an investment of Rs 400 crore. While the task is daunting, a policy should not encourage turncoats and inside traders. Suppose, a mineral prospecting company selectively releases either real or fudged prospecting and exploration data to a company to selectively bid in the auction process. A good safeguard for transferring the rights would be to check the records of the transferee companies. Further, the government must ensure sound disclosure norms. Miners should not forget Bre-X scandal to their own peril.
A good policy should have five objectives:
1. It should encourage efficiency.
2. It should encourage attractiveness and competition.
3. It should help progress towards the development of an industrial framework.
4. It should encourage sound business practices where banks and financial institutions can participate.
5. It must promote responsibility
Value Addition
The much-delayed policy has tried to balance the aspirations of mineral-rich states who were opposed to certain provisions in the policy by retaining their rights to give preference to value addition (within the state) and PSUs while granting mineral leases. While using this system of preference, the state would be bound to offer mineral lease to applicants not belonging to state if there are no applicants for value addition within the state.
critique
It will discourage small time operators in the mining sector- a much awaited step. It will help organized mining. It will encourage the government of India’s participation in the mining sector. Local level favoritism will be discouraged.
But value addition in itself does not mean much; it needs to be quantified. For example, suppose granite blocks of more than 250 mm size has a market price of Rs. 140 per tonne. Now a developer breaks it into less than 50mm chips to cost it at Rs. 170 per tonne. Is this enough value addition, considering in many cases, a small crusher or few laborers can do it? Surely not, since it will not encourage better investment nor will encourage better use of technology. The government should earmark minimum value addition, for example, a minimum of 40% of the start value in every steps of value addition, to encourage better and substantial investment. Similarly, whenever the minimum value addition is to be taken up, the quantity should also be considered. There should be a graded system; this was not mandated in the policy. This is a great weakness of the policy, even with the promise to provide so many opportunities, and should be modified immediately.
Independent committee of experts for renewal of license
For renewal of a mining license, the Centre may constitute an independent committee of experts, may be from Geological Survey of India (GSI) or IBM. The committee would assess the performance of the original allottee before recommending renewal of the license. The state could not deny the renewal by seeking value addition within the state.
Critique
The word “performance” should be clarified with the aspects of appropriate wage, mineral conservation, health and safety, environmental control, retraining of the workers and closure plans. The performance should include the benchmarks of corporate social responsibility standards. Dilution should not be encouraged at all because all governments should care for long term citizen welfare and natural resource conservation.
The ambit and coverage of the committee should include prominent academics and researchers in the mineral sector. This is important considering the technical challenges the policies often face and shall promote more democratic decision making.
Auctioning mining blocks
In another reform initiative, the new policy has permitted auctioning of a mining block that has been prospected (potential of mining block identified) by state agencies like GSI. For these blocks, the present system of a government committee assessing the applications and granting license would be dispensed with.
States would, however, be free to offer exploratory license for new mining blocks.
critique
This policy may not work given that many of the blocks were inadequately explored. Enforceable transparency to all the involved parties will be key to the success. Government must reduce the risks of inaccuracy in exploration to make this policy successful for mining investment. The government must also have means to realize the costs of bringing in more relative accuracy and less risk in the investment.
States should not be allowed to offer exploratory license on re-exploration of blocks that can have ill motives and can offer cans full of worms. Exploratory licenses for a block that was explored less than 20 years back should not be given to any party without checking the antecedents.
Local Area Development
The policy has also put responsibility on the mining companies for undertaking local area development and other infrastructure projects in the mineral bearing areas. At least 10% of the profits would be used for the purpose.
critique
Similar such initiatives were not very successful in the past. As a supplementary to the policy, tax breaks can be announced for new projects. Encourage business development in the process of infrastructure development.
Dispute Resolution
The government today approved the new National Mineral Policy, which, among other things, proposes the setting up of an independent dispute resolution mechanism — the Mining Administrative Appellate Tribunal. The Tribunal will become fully operational in six months, a release issued after a Cabinet meeting said.
critique
This is a very good and timely step. It will auger well for all involved with the industry. It will speed up the dispute resolution process.The tribunal ,its formation and function, should follow the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”) and the United Nations Commission on International Trade Arbitration Rules (“ UNCITRAL Rules”).It will encourage collaboration and alliance.
The Missed Points
A good national policy should not only look for the benchmarks from other countries. The policy should also cover few things that it should have created to help frame a better face of mining. Some of the missed points are:
1. The mineral policy should have kept the provisions of abandoned mined land fund , similar to AML Fund of the USA, in the policy statement. This can be a very costly oversight, considering sustainable development of mineral resources. The fund could be generated from the cess or additional royalty provisions. The fund can be used on public –private partnership basis for re-vegetation and re-generation of mined out areas. The impacts of underground mining should not also be overlooked.
2. Mines should have environmental and effluent discharge standards in keeping with the best of the world and the ministry should not only look in to Indian Bureau of Mines (IBM) only for expertise. Other agencies like NEERI , IITs and ISM should be taken in framing the rule.
3. One glaring deficiency of the policy is to have not looked into the matters of mineral conservation. No mining is much better than little or nibble mining considering the effects that it leaves on the nature and ecosystem .It is also bad economics. Many underground coal mines work on 20% recovery of resource. Such practices should not be allowed at any cost even if otherwise the mining looks profitable and viable. It should be proposed that no mine developer should be allowed to do mining till he promises to do at least mining of the 80 % of the proven reserve.
4. Mining is considered worldwide as an economic activity that helps rural and tribal community, more than many other sectors. But since most of the mining activities are away from the prying eyes of the media and urban population, it breeds corruption at the local level. Workers of mining are thoroughly exploited in terms of wage, poor working and living condition, poor sanitation etc. It is time that the mineral policy has a look on this community side of mining.
5. The policy does not look into making the technology and method of mining to be developed as an institution. For example, like any civil constructions that require registered civil engineers to pass a plan , mining should have registered planners and engineers those who would certify, prepare the accepted plans in accordance of the rule.
The above points should be considered before the suitable amendments in the mines act following the endorsement of the mineral policy in both houses of the parliament.
Hallmarks of a good policy document should hinge on four factors that it should espouse: efficiency, attractiveness, vision and responsibility. This mineral policy should also be discussed in the same light. In the following we will discuss some salient points of the policy with the critiques they deserve:
Trading Mineral Licenses
The government of India has allowed companies to trade mineral licenses freely. New policy would mean that companies interested only in prospecting need not undertake mining but sell the license to a company interested only in mining. The proposal has been included in the new mineral policy that was cleared by Cabinet on Thursday. The new policy has proposed a major change by way of decoupling mineral lease licenses. This would bring more focus as companies with expertise in prospecting need not undertake mining. They can sell their license to another company. The ministerial cabinet expects the change would allow flow of investments from South Africa, Canada and Australia where companies have shown interest in bringing their technical expertise required for identifying the potential of a mining block. Transfer of prospecting license is permitted by several countries. The international practice is being adopted here with the intent of bringing over $2 billion investment in the sector in the next few years. The move is expected to also result in better yields from mining blocks by use of better technologies. It will also encourage competition.
critique
A very welcome step considering the flexibility of investment that it deserves. For instance, out of a total 17,000 sq km of coal bearing area in the country, only 5,400 sq km is fully explored (8 holes per sq km) and another 12,000 sq km is regionally explored (1-2 holes per sq km). Every year, the total drilling requirement will be 1 million meter along with commensurate coring, sampling analysis and report preparation which involves an investment of Rs 400 crore. While the task is daunting, a policy should not encourage turncoats and inside traders. Suppose, a mineral prospecting company selectively releases either real or fudged prospecting and exploration data to a company to selectively bid in the auction process. A good safeguard for transferring the rights would be to check the records of the transferee companies. Further, the government must ensure sound disclosure norms. Miners should not forget Bre-X scandal to their own peril.
A good policy should have five objectives:
1. It should encourage efficiency.
2. It should encourage attractiveness and competition.
3. It should help progress towards the development of an industrial framework.
4. It should encourage sound business practices where banks and financial institutions can participate.
5. It must promote responsibility
Value Addition
The much-delayed policy has tried to balance the aspirations of mineral-rich states who were opposed to certain provisions in the policy by retaining their rights to give preference to value addition (within the state) and PSUs while granting mineral leases. While using this system of preference, the state would be bound to offer mineral lease to applicants not belonging to state if there are no applicants for value addition within the state.
critique
It will discourage small time operators in the mining sector- a much awaited step. It will help organized mining. It will encourage the government of India’s participation in the mining sector. Local level favoritism will be discouraged.
But value addition in itself does not mean much; it needs to be quantified. For example, suppose granite blocks of more than 250 mm size has a market price of Rs. 140 per tonne. Now a developer breaks it into less than 50mm chips to cost it at Rs. 170 per tonne. Is this enough value addition, considering in many cases, a small crusher or few laborers can do it? Surely not, since it will not encourage better investment nor will encourage better use of technology. The government should earmark minimum value addition, for example, a minimum of 40% of the start value in every steps of value addition, to encourage better and substantial investment. Similarly, whenever the minimum value addition is to be taken up, the quantity should also be considered. There should be a graded system; this was not mandated in the policy. This is a great weakness of the policy, even with the promise to provide so many opportunities, and should be modified immediately.
Independent committee of experts for renewal of license
For renewal of a mining license, the Centre may constitute an independent committee of experts, may be from Geological Survey of India (GSI) or IBM. The committee would assess the performance of the original allottee before recommending renewal of the license. The state could not deny the renewal by seeking value addition within the state.
Critique
The word “performance” should be clarified with the aspects of appropriate wage, mineral conservation, health and safety, environmental control, retraining of the workers and closure plans. The performance should include the benchmarks of corporate social responsibility standards. Dilution should not be encouraged at all because all governments should care for long term citizen welfare and natural resource conservation.
The ambit and coverage of the committee should include prominent academics and researchers in the mineral sector. This is important considering the technical challenges the policies often face and shall promote more democratic decision making.
Auctioning mining blocks
In another reform initiative, the new policy has permitted auctioning of a mining block that has been prospected (potential of mining block identified) by state agencies like GSI. For these blocks, the present system of a government committee assessing the applications and granting license would be dispensed with.
States would, however, be free to offer exploratory license for new mining blocks.
critique
This policy may not work given that many of the blocks were inadequately explored. Enforceable transparency to all the involved parties will be key to the success. Government must reduce the risks of inaccuracy in exploration to make this policy successful for mining investment. The government must also have means to realize the costs of bringing in more relative accuracy and less risk in the investment.
States should not be allowed to offer exploratory license on re-exploration of blocks that can have ill motives and can offer cans full of worms. Exploratory licenses for a block that was explored less than 20 years back should not be given to any party without checking the antecedents.
Local Area Development
The policy has also put responsibility on the mining companies for undertaking local area development and other infrastructure projects in the mineral bearing areas. At least 10% of the profits would be used for the purpose.
critique
Similar such initiatives were not very successful in the past. As a supplementary to the policy, tax breaks can be announced for new projects. Encourage business development in the process of infrastructure development.
Dispute Resolution
The government today approved the new National Mineral Policy, which, among other things, proposes the setting up of an independent dispute resolution mechanism — the Mining Administrative Appellate Tribunal. The Tribunal will become fully operational in six months, a release issued after a Cabinet meeting said.
critique
This is a very good and timely step. It will auger well for all involved with the industry. It will speed up the dispute resolution process.The tribunal ,its formation and function, should follow the Rules of Arbitration of the International Chamber of Commerce (“ICC Rules”) and the United Nations Commission on International Trade Arbitration Rules (“ UNCITRAL Rules”).It will encourage collaboration and alliance.
The Missed Points
A good national policy should not only look for the benchmarks from other countries. The policy should also cover few things that it should have created to help frame a better face of mining. Some of the missed points are:
1. The mineral policy should have kept the provisions of abandoned mined land fund , similar to AML Fund of the USA, in the policy statement. This can be a very costly oversight, considering sustainable development of mineral resources. The fund could be generated from the cess or additional royalty provisions. The fund can be used on public –private partnership basis for re-vegetation and re-generation of mined out areas. The impacts of underground mining should not also be overlooked.
2. Mines should have environmental and effluent discharge standards in keeping with the best of the world and the ministry should not only look in to Indian Bureau of Mines (IBM) only for expertise. Other agencies like NEERI , IITs and ISM should be taken in framing the rule.
3. One glaring deficiency of the policy is to have not looked into the matters of mineral conservation. No mining is much better than little or nibble mining considering the effects that it leaves on the nature and ecosystem .It is also bad economics. Many underground coal mines work on 20% recovery of resource. Such practices should not be allowed at any cost even if otherwise the mining looks profitable and viable. It should be proposed that no mine developer should be allowed to do mining till he promises to do at least mining of the 80 % of the proven reserve.
4. Mining is considered worldwide as an economic activity that helps rural and tribal community, more than many other sectors. But since most of the mining activities are away from the prying eyes of the media and urban population, it breeds corruption at the local level. Workers of mining are thoroughly exploited in terms of wage, poor working and living condition, poor sanitation etc. It is time that the mineral policy has a look on this community side of mining.
5. The policy does not look into making the technology and method of mining to be developed as an institution. For example, like any civil constructions that require registered civil engineers to pass a plan , mining should have registered planners and engineers those who would certify, prepare the accepted plans in accordance of the rule.
The above points should be considered before the suitable amendments in the mines act following the endorsement of the mineral policy in both houses of the parliament.
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