India : Mining Industry Structure
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Background of Mining in India. India has a strong mining heritage and has had a substantial mining and mineral processing industry for much of its history. It is a world leader in commodities such as iron ores and products, manganese, bauxite and aluminium, coal, dimension stone, calcium carbonate, talc, mica and barite, many of which are mined by both private-sector and government-owned companies.

A lot of action is taking place in India in the fields of iron-ore mining and steel making, and thermal coal mining. Those fields are outside our core business and outside the scope of this review.

From shortly after Independence in 1947 until 1994, certain metals and minerals were restricted to government-owned companies. These included gold, copper, zinc, lead, nickel, platinum and palladium, molybdenum, tungsten, chromite and diamonds and other gem stones.

These are minerals that are not easy to find and develop. Exploration for them requires risk capital. Without the verve and capital of the private sector exploration business -- large and small companies willing to accept these risks -- it is not surprising that India's mine capacity in these minerals has fallen behind those of Canada and Australia, for example, which have similar geology and mineral deposits.

The Indian government addressed this in its new 1993 mineral policy, which set the stage for private and foreign investment in the formerly restricted minerals, and it is continuing to hone its policies to encourage private development. India's "New Mining PolicY" was introduced in early 2008 after several years in preparation. It offers several new advantages to explorers and developers and is expect to become law in late 2009 after the next election.

Smelters, Refiners and Traders. In addition to smelters and refineries operated by government companies, India has a large community of private-sector metals traders.

Many of these companies import, recycle and process metal scrap. Some have integrated vertically into smelting and refining of metal ores and concentrates. These enterprises are starting to integrate vertically, upstream, into domestic exploration and mining.

Mining Goods and Services. Different enterprises in India manufacture nearly a complete range of mining gear -- locomotives, winders (hoists), mine cars, crushing and grinding equipment, trucks, generators, compressors, flotation cells, etc. Much of what's needed for exploration, development and mining can be sourced within India.

Most importantly -- skilled and well-educated engineers, geologists, executives, information technology personnel, technicians, and others are also widely available in India.

Foreign Mining Companies in India. Since 1993 several international mining companies have opened offices in India, acquired mineral rights and started exploration for new ore deposits. The large companies active in India for some time include BHP Billiton, De Beers, Rio Tinto and Anglo American.

There are currently seven junior exploration companies and mine developers from Australia, Canada and the UK working in India and their numbers are growing. We expect more to come after the New Mining Policy is adopted and the metals markets recover to their pre-2008 state.

(Updated January 1, 2009)

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