Explore In India To Mine In India

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TWO years ago, a Chinese mining billionaire visited India to scout for investment opportunities. He met the Minister (Mines), and proudly claimed, “I can invest a couple of billion dollars. Please tell me where to put in the money, and how fast can I start production.” Taken aback, the minister began to extol the advantages and potential of the Indian mining sector. The billionaire listened carefully, left the office, and later shook his head. “I don’t invest in potential. I invest in profits,” he told his Indian aide.

The lessons from this anecdote are revealing. Although India has the best mining policies and laws, there are grave apprehensions among the foreign investors. The same is true about the local private miners. Therefore, it is time to address the micro issues now that the macro guidelines are in place. There are three areas that require the government’s immediate attention—auction, exploration and land acquisition. This is especially true in a scenario where Indian mining has witnessed de-growth over the past three years.

Let’s look at the auction process to lease the mines, which is hailed as a transparent mechanism to maximise government revenues. It took several scams and Supreme Court orders for the policy-makers to adopt auction, and ditch the global best practice of first-come, first-served. The reason for this change was that the latter system became rotten, and degenerated into a discretionary one, in which leases were doled out to favourites in the business community. It took the form of crony capitalism.