India: a new star for mining entrepreneurs? Part one

By Jeames McKibben, Manish Garg and Michelle Clarke of Xstract Mining Consultants

To date, Australia has been a key beneficiary of this demand, with India being a major export destination for its products as well as an avid investor in its resources industry. However, despite a similar geological setting, shared grounding in British statutory and business frameworks and Australia’s reputation as “roaming investors”, the level of Australian investment in India’s mining industry remains minimal.
With a rich mineral endowment, India presents many opportunities to international mining investors. Currently India’s mining industry accounts for some two per cent of the country’s Gross Domestic Product (GDP).
Fuel minerals (coal, lignite, petroleum and natural gas) account for some 80 per cent of India’s total mineral product.
Other minerals include primary metal ores such as iron, bauxite, manganese, chromium and titanium, as well as limestone, mica and barite, where India holds globally significant reserves and is a major producer.
India’s geology is similar to that in Western Australia, Canada and Brazil and hence highly prospective for further discoveries in gold, iron, nickel, base metal, coal and industrial minerals.
With an abundance of inexpensive coal and natural gas, India is a major energy producing nation.
The country’s deposits of bauxite and iron are amongst the best in the world in terms of quality and mineability.
India is strategically located to developed European markets and fast-developing markets for export of steel and aluminium. In addition, there are large-scale export routes to China and Japan.
Another advantage of mining in India is the access to abundant labour and associated low labour costs. And the country features a number of proposed large infrastructure construction programs and mining developments to underpin social demographic changes and growth.
Despite these factors, India continues to lag as a result of a lack of investment in exploration and prospecting. In fact India is estimated to spend less than US$2 million annually on prospecting and exploration for minerals and metals.
The prospect of a resources based investment in India is likely to be attractive to Australian companies provided they identify the right investment vehicle and have the patience with the slow approvals timeframes.
Other impediments include high rates of illegal mining and lack of environmental accountability.
Government dominance in the mining sector controls more than 80 per cent of coal output, and mineral exploration.
Many of the rich mineral deposits are in environmental sensitive areas in India. And Indian mining companies have, in the past, been irresponsible in mitigating the effects of mining resulting in public antagonism towards the industry.

* Written by Jeames McKibben with input from Marnish Garg and Michelle Clarke - from Xstract Group, a team of specialist mining consultants.
For more information email: jmckibben@xstractgroup.com or visit: www.xstractgroup.com 

To read the final part of this report click here.