FACTS’N’FIGURES — India’s untapped potential

Recent changes to India’s mining regulations are paving the way for increased foreign investment in that sector and a stronger Indian economy.

At a recent conference in London, B.P. Baishya, India’s minister of steel and mines, emphasized the geological diversity and potential of India’s untapped natural resources, which include coal, diamonds and base metals.

The private sector, the backbone of the Indian economy, accounts for 75% of its gross domestic product, and the country’s United Front government envisages foreign investment of US$10 billion per year in the coming years. A sizable portion of this is expected to be concentrated in the mining sector.

In order to foster such investment, the government is allowing foreign companies to acquire majority interests in state-run exploration and development projects.

Foreign investors and mining firms (especially those from Australia and South Africa) are already responding to these reforms. In recent months, about two dozen proposals for foreign investment in the mining sector, worth a total of US$500 million, have been approved by the government. These include a deal to allow BHP Minerals a 60% equity participation in a joint venture with Hindustan Zinc (a government-owned company) to explore for gold and base metals, plus a 50% interest for DeBeers Consolidated Mines in a proposed diamond exploration project.

India is attracting exploration companies for numerous reasons, including an experienced pool of geoscientists, accessible locations and a large mineral database.

The growth of the Indian economy will require increasing quantities of basic raw materials such as coal, and base and precious metals to meet the needs of the domestic and export markets. India has large quantities of mineral reserves, and its vast Precambrian Shield, like those in Canada and Australia, is known to contain gold, platinum group metals and base metals, as well as coal and industrial minerals. India’s total annual mineral production is currently valued at more than US$7 billion.

Administration of the country’s mining sector is divided among the ministry of mines, which regulates and develops the country’s mineral resources, five public sector mining enterprises, the Geological Survey of India (GSI), the Indian Bureau of Mines, and 25 states and seven union territories.

The GSI is the second-oldest, and third-largest, organization of its type in the world. It has mapped more than 90% of India’s 3.3 million sq. km, and has uncovered numerous mineral prospects through regional exploration.

The Bureau of Mines recently completed a national mineral inventory covering 13,000 deposits and prospects of non-ferrous minerals. In addition, the GSI has compiled a similar inventory of as many coal fields. Other GSI discoveries include diamonds, gold and base metals.

Although the central government is responsible for ensuring uniform mining laws, state governments grant mineral concessions and prospecting and mining licences. The Indian government has formulated the following guidelines for granting large licence areas:

* Licences for areas exceeding 25 sq. km will be provided on the condition that the licencee conduct aerial geophysics over the area.

* A single licence area will not exceed 5,000 sq. km, and the total area held by one company will not exceed 10,000 sq. km for the entire country.

* The grant of larger areas will be linked to a minimum expenditure commitment or physical targets. State governments will monitor these expenditures.

* The granting of large areas for prospecting will be linked to a schedule of relinquishment.

— The author is an independent mining consultant based in Richmond Hill, Ont.