Thursday, January 21, 2010

India's minerals yet to woo foreign investors

Indian mining companies have, in the past, been irresponsible in mitigating the effects of mining resulting in public antagonism towards the industry, a new report by James McKibben, Manish Garg and Michelle Clarke of Xstract Mining Consultants argues. Other factors limiting spending on prospecting and exploration for minerals and metals in India to less than $2 million annually include high rates of illegal mining, lack of environmental accountability and government dominance in the mining sector (controlling more than 80% of coal output and mineral exploration).

However, with a rich mineral endowment and a population expected to surpass that of China by 2045, India presents many opportunities to international mining investors. Fuel minerals (coal, lignite, petroleum and natural gas) account for some 80% of India’s total mineral product and the country holds globally significant reserves and is a major producer of iron, bauxite, manganese, chromium and titanium, as well as limestone, mica and barite.

"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," the authors write in the Australian Journal of Mining. "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."

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