India's Metals and Minerals Mining Projects to Attract $25 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--Amendments to India's Mining Act will be made in parliament in April leading to the new National Mining Policy 2008 and will open up the country's potential in the sector. The new policy has been in the pipeline for two years.

With 1.85 million square kilometers of mineral resources, the country is anticipating $25 billion in foreign direct investments (FDI) to pour into the sector in the coming years. Over the next five years, $250 million annually is expected to be invested by foreign miners and developers, bringing the technology and capital needed to exploit the rich resources.

Fourteen companies from Australia, Canada and South Africa have already expressed strong interest in bringing in the technical expertise required to identify the potential of mining blocks, and Indian government officials are to visit these countries to explore project investment potential. Companies investing "heavy risk" capital will automatically receive the mining lease to enable them to protect their capital and will give India the ability to develop capital-intensive projects.

India produces 89 minerals of which 11 are metallic and 52 are non-metallic. The country is estimated to hold 2.92 billion tons of bauxite (10% of the world's reserves) and 276 billion tons of coal. Domestic demand for gold is expected to hit 1,200 tons per annum (TPA), but India currently produces only 3 tons for a current demand of 800 TPA. Gold reserve potential for mining and refining operations is estimated at 14,000 tons.

The new policy will shorten the time it takes to be granted a new mining lease by state and federal governments between six months and a year, replacing a long and uncertain process. If the maximum period for granting is exceeded, the lease application will be automatically referred to a tribunal. Under the new guidelines, foreign and domestic companies should find it easier to invest in exploration and mining projects for gold, diamonds and metals, such as copper and zinc. Royalties for states where mining takes place should increase as they will be decided on the basis of the selling price of the mineral mined rather than the present system based on tonnage mined.

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