Geonesis November 2016

Geonesis
NOVEMBER 2016
(A GEMCO KATI INITIATIVE)
Indian Mining & Exploration Updates
VOLUME 3,ISSUE 12

VOLUME 3, ISSUE 12 — NOVEMBER 2016
Page 1
CENTRE BACKTRACKS ON COAL MINING BY PVT SECTOR
Come April, the Centre would stop importing coal for state-
run power producers. It has also put on hold the plan to
award blocks to the private sector.
With the abundance of coal and little demand, the government
has decided not to import any coal for any state-run power
PSUs (public sector undertakings) after the current contracts
expire.
Poor demand has also made government
go back on its earlier decision to award
blocks to the private sector for commer-
cial mining, coal secretary Anil Swarup
said.
"We have done a very detailed analysis
of how to handle imports and strategies
related to power and non-power sector.
In power sector, we have engaged with
each of the PSUs. By 31st March, imports
by PSU power utilities would be zero.
There will no imports thereafter," Swarup said while address-
ing members of MCC Chamber of Commerce.
Public sector power producers imported 35-40 million tonne
coal. "By end of this year, we will reduce imports by 15 million
tonne.
There is unit-by-unit strategy to cut imports," the secretary
said. The ministry is also looking at how to encourage private
sector including industries like steel to replace better quality
imports by poor quality domestic coal. "In power, there are
boilers suited for imported coal. We are exploring how to mix
domestic coal with imports for such plants.
Similarly, we are trying to do it for deregulated sectors. We have
engaged with SAIL, RINL and others on how to provide the coal
they are importing."
While the PSUs are being told not to import, for the private sector,
the availability of coal is being increased through auctions.
"With international prices firming up, there is a chance that this
coal would get picked up. We are
assuring the supply of coal for pri-
vate sector, while earlier there was
only spot auction, now there is
availability throughout the year."
Apart from curbing imports, anoth-
er fallout of excess coal availability
is the disinterest in promoting com-
mercial mining by private sector.
"The ground work (for commercial
mining) has been done but because
of good work being done by Coal
India, there is not much demand for mines as there were hardly
any demand in the fourth round of auction," Swarup said when
asked about prospects of commercial mining.
Earlier this year, the government opened up commercial mining
in India by allocating 16 mines with an estimated annual capacity
of 40 million tonne to various states.
According to a recent report by BMI Research, an arm of global
rating agency Fitch, India may continue to suffer from deficit in
coal requirement due to delays in opening up of commercial min-
ing to private sectors and slow approvals for new state miners.
ORISSA PUTS FOUR MORE MINES ON AUCTION
The state government on Wednesday issued notification for
auction of three limestone and one manganese blocks. Ac-
cording to an official notification, last date for submission of
bid is December 12.
The blocks which would
go under hammer are
Kotameta, Garramura,
Uskalvagu (limestone)
and Lasarda-Pacheri man-
ganese block. The govern-
ment has so far auctioned
only one block though the
mining auction process
started in December last
year.
"Due to technical issues, it took some time to put the blocks on
auction. After completion of this round of auction, we are
preparing more four blocks (three iron ore and a bauxite) to
be put on auction," said director of mines Deepak Mohanty.
The auction would be conducted in two phases - technical evalua-
tion and financial bidding. Those selected in the technical evalua-
tion process can only take part in the financial bidding. While fi-
nancial bids are invited only in
digital format, technical bids
have been invited both in digital
and physical format from eligible
bidders, said the notification.
The base price for the tender
process would be determined
after the technical evaluation
process, sources said.
Earlier, the Centre has asked the
state government to expedite the
mining auction process. So far,
the state government has auctioned only one iron ore block
(Ghorhaburhani-Sagasahi) in Sundargarh district which has an
estimated reserve of around 1,000 million tonne. Essar
Steel bagged the block.

Page 2
MINING LICENCES: STUCK GREEN NODS RAISE LITIGATION WORRIES
Several major steel and cement companies have not been grant-
ed mining licences (MLs), for which the letter of intents (LoI)
were signed with the respective state governments in 2014 or
before, primarily due to the absence of environmental or forest
clearances. The Central government is worried that these com-
panies — who must get their MLs by January 11, 2017 — would
go to the courts in case of any delay.
“The applications, which will lapse on January 11, 2017, due to
want of clearances, may lead to several litigations. Thus, all
concerned must make all necessary efforts to expedite these
cases,” said Balvinder Singh, Secretary, Union mines ministry,
in a meeting with senior officials of the Ministry of Environ-
ment, Forest & Climate Change (MoEFCC) and various state
governments, on September 27.
Major companies such as ACC, Ultratech, Jindal Steel and Pow-
er Limited (JSPL), Arcelor Mit-
tal India and Steel Authority of
India (SAIL) are waiting for
MLs for more than two years.
Their applications are unique
as they were under process
either with the state govern-
ment or the Centre even before
January 2015, when the new
mining law came into effect.
Under the old law, the firms
were granted MLs by the states
on a discretionary basis. The
new law introduced a new way
of granting MLs — through
auction. To avoid putting the
whole sector in a limbo, the
new law — Mines and Miner-
als (Development and Regula-
tion) Amendment Act, 2015 —
had a provision for the applica-
tions already in process under
the old law at various levels of
government machinery.
While the new law stipulated that all licences henceforth would
be granted only via auctions by the respective state govern-
ments, it also said that if any firm was issued a LoI by the state
under the old law, the ML for that block should be directly
granted by January 11, 2017. Moreover, if any application has
been approved by a state government under the earlier law, but
got stuck with the Centre, the ML for that too was required to
be issued by January 11, 2017.
Heading to courts
While some companies are keeping their fingers crossed, others
are ready to move courts to get their MLs. JSPL has put in the
applications for two mines — one is a limestone mine in
Bilaspur, Chhattisgarh, and another an iron ore mine in Ghatku-
ri, Jharkhand. However, these applications are not getting forest
clearance. “We at JSPL are working towards obtaining all the
necessary clearances and are very hopeful that appropriate action
will be taken by the respective authorities towards the grant of
mining leases in respect of the said blocks allocated to us,” said
the JSPL spokesperson in response to the queries from The Indi-
an Express.
While JSPL did not say what it will do in case it does not get the
mine by January 11 next year, Jayaswal Neco — which has got
three of its application stuck for the want of forest clearance —is
ready to take the government to court.
“The efforts of state and Central governments as far as the Minis-
try of Mines is concerned is appropriate, however, the other min-
istry ‘MoEF’ (Ministry of Environment Forest & Climate Change)
which is to grant FC (forest
c l e a r a n c e ) a n d E C
(environmental clearance) … is
unable to relax the provision of
law to save this cases. Hence all
the effort of mines ministry to
expedite the execution of min-
ing lease is becoming futile. If
the commitments of the govern-
ment is not honored and the
mining lease is not granted,
then the company will be com-
pelled to approach the appro-
priate court for justice on the
matter,” said S K Moitra, presi-
dent, Jayaswal Neco.
Although the mines ministry
data says that the company
needs forest clearances in order
to get MLs for three mines, Moi-
tra said that the company re-
quires an environmental clear-
ance and not forest clearance.
Ultratech — the largest cement company in the country— is wait-
ing to obtain MLs for six different limestone blocks. According to
mines ministry, five of these applications are for limestone mines
in Gujarat — two are stuck with MoEF, two at the state-level and
one has to be processed by the company itself. The sixth lime-
stone mine is in Chhattisgarh; the application is stuck with
MoEFCC.
ACC, another major cement company, has put in two applica-
tions for limestone mines — one in West Singhbum, Jharkhand
and the other in Kadapa, Andhra Pradesh. Both the applications
need an environmental clearance and are pending with respec-
tive state governments. ACC and Ultratech did not respond to
the queries from The Indian Express.
(continued on page 3)...

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According to mines ministry, a total 137 such applications are
pending for the want of environmental or forest clearances.
While the ministry is pushing for provisional clearance, the
environment ministry has told it that any such clearance given
to the company is likely to create more problems later.
“Gyanesh Bharti, Joint Secretary, MoEFCC mentioned that
such a provisional clearance can lead to issues if the final clear-
ances under Section 2(ii) are not forthcoming; the lease holder
(company) would end up in loss because he would not be able
to take up mining operations in any portion of the land and
the entire efforts made by them could go futile.
Having paid NPV (net present value) for the whole land, it is pos-
sible that the Project Proponent (company) would move the court
in frustration,” said the minutes of September 27 meeting.
While some companies are contemplating legal action, others are
in the mood to wait and watch. On the other hand, the environ-
ment ministry is reluctant to grant provisional clearances and
state departments are moving at their own speed. It is clear that
the situation requires some clear and consolidated action as Janu-
ary 11 is coming near.
33 MINERS TRAPPED IN CHINESE MINE FOUND DEAD
All 33 coal miners trapped underground in a gas explosion
earlier this week have been found dead, state media reported
Wednesday, as work safety
officials vowed to punish
those responsible.
Two miners survived Mon-
day’s explosion but rescuers
working around the clock
found no others alive. All
bodies have been recovered
and rescuers were shown
bowing their heads in me-
morial for the dead.
Gas explosions inside mines
are often caused when a
flame or electrical spark ignites gas leaking from the coal
seam. Ventilation systems are supposed to prevent gas from
becoming trapped.
State Administration of Work Safety ordered an investigation into
the blast, “adding that those responsible must be strictly pun-
ished.” Local officials in
Chongqing also ordered small-
er mines to shut down tempo-
rarily, Xinhua said.
China’s mining industry has
long been among the world’s
deadliest. The head of the State
Administration of Work Safety
said earlier this year that
struggling coal mines might be
likely to overlook mainte-
nance.
China is the world’s largest
producer and consumer of coal but plans to shutter more than
1,000 outdated mines as part of a broader plan to reduce overpro-
duction.
FOREST CLEARANCE APPROVED FOR 69 MINING LEASES BY ENVIRONMENT
MINISTRY
In what may provide a push to India’s mineral production ef-
forts, the ministry of environment, forests and climate change
(MoEFCC) has agreed to give forest clearance to 69 mining
leases for which letters of intent (LoIs) were granted before the
Mines and Minerals (Development & Regulation) Amendment
Act, 2015 (MMDR) came into effect.
A total of 317 such LoIs across 12 mineral-rich states were is-
sued before MMDR came into force in January 2015. Under the
old regime, mining licences were granted to companies by the
states on a discretionary basis. However, the new Act allows
for grant of mineral concessions through auctions to bring in
transparency.
The MoEFCC’s stand to provide relief to companies engaged in
steel and cement manufacturing comes in the backdrop of itruling
out granting environment clearance (EC) for around 200 mining
leases, where licences were granted before MMDR came into ef-
fect. “The MoEFCC agreed that the general forest clearance can
be considered and for that individual applicants are required to
apply for forest clearance under section 2(iii) of Forest Conserva-
tion Act, 1980, along with a copy of the mining plan within 15
days,” mines secretary Balvinder Kumar wrote in a 20 October
(continued on page 4)...

Page 4
communication to the chief secretaries of states including An-
dhra Pradesh, Jharkhand, Odisha and Tamil Nadu.
The letter is available on the website of mines ministry. The
concerned departments of the state governments may be asked
to take immediate ac-
tion for forwarding
these forest clearance
a p p l i c a t i o n s t o
MoEFCC, the letter
noted.
“The mines ministry
will soon hold a meet-
ing with state chief
secretaries and the
MoEFCC to discuss the
pending environment
clearances for mines,”
Kumar told InfraCircle.
These pending cases of
mining leases pertain to section 10A(2)(c) of the MMDR Act
wherein the last date of execution of lease deed is 11 January
2017.
Section 10A(2)(c) states, “If a letter of intent (by whatever name
called) has been issued by the state government to grant a min-
ing lease, before the commencement of the MMDR, 2015, the
mining lease shall be granted subject to fulfilment of the condi-
tions of the previous approval or of the letter of intent within a
period of two years from the date of commencement of the said
Act.”
Out of the 317 cases, there are 69 cases involving environment
clearances. Apart from this, there are about 95 cases pending for
action with the state governments. Also, there are 97 such cases
wherein the project proponents have not taken action to process
their clearances in which notice may be issued.
Experts welcomed the move.
“There needs to be a
balance between green
issues and economic
development. These
mining leases were stuck
since years and hence
forest clearance will the
pave way for various
steel and cement projects
to go ahead,” said V.S.
Jain, former chairman
and managing director
of state-owned Steel
Authority of India Ltd.
Currently, mining con-
tributes around 2-2.5% to India’s gross domestic product (GDP)
with the government projecting a GDP growth of 7-7.75% for the
current financial year. The government wants to increase the
share of mining sector in the country’s GDP by one percentage
point over the next three to four years.
“Mining lease applications, if not executed before 11 January
2017, would suo-motu lapse. That’s why, their expeditious pro-
cessing is important as not only would it affect the mining sector,
but also have its impact on the downstream and allied sectors.
Moreover, lapsing of these applications, which are in process of
acquiring clearances, may likely to result in litigations, if not
expedited,” the letter added.
GOVERNMENT APPROVES EXPLORATION PROJECTS IN KOLAR GOLD FIELD; DE-
FUNCT BHARAT GOLD MINES MAY GET A LIFELINE
In what may be a lifeline for Bharat Gold Mines Ltd (BGML), the
government on Tuesday approved three gold exploration pro-
jects in the Kolar Gold Field (KGF) area of the defunct state run
firm.
Previously known as Kolar Gold Mines, BGML is a public sector
unit under the ministry of mines which ran into heavy losses
and was eventually closed down in March 2001.
The mines ministry plans to expedite India’s gold exploration
efforts with the state governments of Madhya Pradesh and Jhar-
khand putting up gold deposits for auction. India and China
were the key countries dominating the global gold market in
2015, according to the World Gold Council, a lobby group.
“The Standing Committee on Promotional Projects (SCPP) ap-
proved three gold blocks for exploration in the KGF area of
BGML. These blocks are to be explored expeditiously to decide
the fate of BGML,” said a senior government official on condi-
tion of anonymity.
The exploration proposals cleared by the SCPP includes estima-
tion of gold ore in BGML leasehold area which may be handed
back to the closed company, said another government official,
who also did not want to be named.
“State-owned Mineral Exploration Corp. Ltd (MECL) will under-
take exploration work up to G3, or prospecting, level. Efforts are
on to revive the company rather than selling it to private par-
ties,” said the second official, adding that the company still exists
as per the Companies Act as its assets have not been liquidated.
This comes at a time when the National Democratic Alliance
government is also trying to revive three defunct urea units at
Barauni, Sindri and Gorakhpur.
India’s total demand for gold jewellery, bars and coins increased
by 6% year-on-year to 233.2 tonne in the fourth quarter of calen-
dar year 2015 (October-December), according to the World Gold
Council’s demand trends for 2015.
(Continued on Page 5)...

Page 5
However, consumer demand for gold during the second quar-
ter of this year (April-June 2016) fell by 18% to 131 tonne com-
pared with 160 tonne in the year-ago period due to steep pric-
es.
Around 15,390 metre of drilling is required in 80 boreholes in
an around the KGF area, which will entail an investment
ofRs.18.76 crore.
The largest gold reserve of BGML, KGF, lies in Kolar district of
Karnataka. With the mining lease of KGF expiring in 2013, a
renewal application has been filed.
Queries emailed to the spokespersons of the mines ministry
and MECL on 25 October remained unanswered.
According to information available on the website of the mines
ministry, even after 120 years of mining the value of the fields
runs into a couple of thousand crore.
Experts too believe that KGF has potential to be revived.
“It’s been long since these mines have remained closed. Now,
cut-off grades for gold is low and the dumps lying there may
contain sizeable chunk of gold ore. This is a perfect case
for reviving mining operations at BGML. However,
if employees will have a say or it may be revived via state-run
undertaking is a matter which needs to be seen,” said Dipesh
Dipu, founder and partner at Jenissi Management Consultants,
a Hyderabad-based energy and resources sector consulting
firm.
Former mines minister Narendra Singh Tomar had also asked
state exploration agencies to re-evaluate the dumps as well as
the mines of BGML in order to determine the correct value of
these mines.
MAITHAN ISPAT BAGS INDIA’S SECOND GOLD MINE IN AUCTION
India’s second gold mine auction in Jharkhand has been won
by MESCO Group’s Maithan Ispat Ltd.
In the auction that took place on 26
October with Adani Enterprises Ltd,
Rungta Mines Ltd, and Ramgad Min-
erals and Mining Ltd vying for the
Pahadia block, spread across 272.651
hectare, Maithan Ispat Ltd won the
bid.
Maithan Ispat Ltd is a subsidiary of
Mideast Integrated Steels Ltd and
manufacturers iron, and heavy melt-
ing steel. Chhattisgarh auctioned the
country’s first gold mine, Baghmara,
in February which was won by Ve-
danta Ltd.
“The gold block in Jharkhand has been bagged by Maithan
Ispat Ltd and it had put in bids which are over 28% of the re-
serve price to emerge as the preferred bidder,” said a senior
government official requesting anonymity.
The mineral resources available in the Pahadia block include
1.162 million tonne (MT) of gold ore, with 2.12 gram per tonne
of the metal, besides 1.162 tonne of silver, 232.4 tonne of copper,
581 tonne of lead, 1,859 tonne of zinc, 2,905 tonne of nickel and
1.162 MT of quartz.
“After the Mines and Min-
erals (Development and
Regulatory) Amendment
Act, 2015 came into effect,
17 blocks have been auc-
tioned across seven states
fetching Rs.59,639 crore for
state governments over a
period of 50 years includ-
ing royalty,” said another
government official aware
of the development, who
also didn’t want to be
named.
Jharkhand had invited revised bids for auctioning the deposit
under the composite licence route after few miners showed inter-
est in the earlier bid called in January. A composite licence holder
conducts the geophysical exploration of the area to find out the
exact reserve of the mineral and starts mining later.
(Continued on page 6)...

Page 6
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Queries emailed to the spokespersons of the union mines minis-
try, Jharkhand government’s mines and geology department
and Maithan Ispat Ltd on 27 October remained unanswered.
Experts welcomed the move.
“Prospects for these mines are good. As these are being given
under composite route, detailed investigation of the reserves
will also be done. Also, base metals including gold and copper
are deep seated, and are less available in surface, hence chances
of reserves increases after further mineralisation,” said Harbans
Singh, former director general of the Geological Survey of In-
dia.
According to the World Gold Council, a lobby group, India and
China were most influential in driving gold jewellery demand
during the period April-June, when demand for most countries
remained subdued. However, consumer demand for gold during
the second quarter of this year (April-June 2016) fell by 18% to
131 tonne compared with 160 tonne in the year-ago period due
to steep prices.
India has gold deposits spread across several states, including
Chhattisgarh, Jharkhand, Madhya Pradesh, Rajasthan, Andhra
Pradesh, Karnataka, Kerala and Tamil Nadu.
JSPL REOPENS MOZAMBIQUE MINES TO TAP RISING COKING COAL PRICE
Jindal Steel and Power Ltd (JSPL) has reopened its mines in
Mozambique from 1 October as the price of coking coal, used in
steel production, has surged because of supply cuts in China.
The company, which is in the process of selling some of its as-
sets in the power sector to reduce over Rs 40,000 crore of debt,
expects the rise in coking coal prices to help improve the perfor-
mance of its mining operations in
the second half of the year.
JSPL, which has mining, steel,
power and construction business-
es, had reported a consolidated
loss of Rs1,082 crore for the June
quarter, double the loss it had
reported in the year ago period,
mainly on account of nearly flat
demand for steel and high fi-
nancing costs.
Ravi Uppal, managing director
and group chief executive officer
of JSPL, said its unit JSPL Minerale Mozambique LDA has re-
started mining operations at the Chirodzi Mines in Tete Prov-
ince in Mozambique as the global price of coking coal, also
known as metallurgical coal, has risen by more than 150% since
August. JSPL expects access to own coking coal will also give its
steel output a competitive edge. India has no coking coal re-
serves and the entire requirement is imported from markets
such as Australia, Canada and Africa.
“Prime hard coking coal (a grade) was in the range of $85 in
August. Today the same is being sold at $215 per tonne. Metal-
lurgical coal accounts for a fifth of the cost of making steel and
has a direct impact on the price of steel. Steel price is set to go
up,” said Uppal in an interview. JSPL has 4.75 million tonne a
year steel capacity in India and a 2 million tonne capacity in
Oman.
While the increase in the price of coking coal in world markets is
welcome news for miners, passing on the increased cost of coal
may not be easy for domestic steel producers in the face of cheap
steel imports from China and from countries with which India
has free-trade agreements such as Japan and South Korea.
“Coking coal price has been volatile recently and has witnessed
an unprecedented increase
since August 2016. Any
sustained increase will
erase existing thin operat-
ing margins of steel pro-
ducers and further compli-
cate logistics and supply
chain management deci-
sions,” said Hemal H.
Shah, partner, advisory
services, EY. Many Indian
steel companies are de-
pendent on coking coal
from China and it is to be
seen whether this price ($215 per tonne) continues to appreciate
further creating more uncertainty, added Shah.
Domestic primary steel producers (those who make steel from
iron ore) have been depending on protectionist steps taken by
the government to sail through a period of excess steel produc-
tion capacity worldwide. These include imposing minimum im-
port price for select steel products and enforcing a 30% export
duty on iron ore exports meant to ensure raw material availabil-
ity to primary steel producers. Downstream user industries of
steel (including secondary steel producers) have been resisting
these steps as it impact their raw material costs.
“The protectionist duties on hot rolled coils and plates have led
to a situation where import duty on raw materials is higher than

Page 7
that on finished products. As a result, import of steel-based
manufactured items have gone up while import of hot rolled
coils and plates has declined between June and August. It ad-
versely affects the Make in India drive,” said S.C. Mathur, ex-
ecutive director of Cold Rolled Steel Manufacturers Associa-
tion of India. Uppal of JSPL, however, believes that in the sec-
ond half of the year, the steel industry is expected to do better.
“Demand will go up by 4-5% this financial year. In the first
two quarters, it was just 0.5%. In the second half, it is expected
to go up by 8%. The industry’s fundamentals are strong. It is
just going through a low point,” he said.
JSPL’s Mozambique mine, acquired in 2011, was put under care
and maintenance early this year due to a progressive fall in the
price of coking coal, which forced global mining majors to close
down mines. The company’s mines in Australia have extractable
coking coal reserves of 250 million tonnes, while the mines in
Mozambique have extractable reserves of 450 million tonnes, a
fourth of which is coking coal. The company is currently in the
process of selling its 1000 MW power plant at Raigarh in Chhattis-
garh to Naveen Jindal’s brother Sajjan Jindal for 4,000 crore to
Rs6,500 crore, depending on the plant securing a power purchase
agreement within a specified time.
SMALL BLOCKS KEEP INVESTORS FROM MINE BIDS
With the private sector shying away from investing in mining,
experts say it is not just regulatory bottlenecks but also the
smaller deposits on offer that are keeping them away.
The central government is anticipating revenue of Rs 59,639
crore from recently concluded auctions of mineral blocks in
Jharkhand, Odisha, Rajasthan, Chhattisgarh, Andhra Pradesh,
Madhya Pradesh and Kar-
nataka. This revenue in-
cludes royalty and funds for
the district mineral founda-
tions and the National Min-
eral Exploration Trust.
The Mines and Minerals
(Development and Regula-
tion) (Amendment) Act,
2015, envisages a uniform
lease period of 50 years.
Thereafter, all mining leases
will be put up for auction
again.
Experts say 17 mines that were put up for sale were not only
small in area but also in terms of the reserves available. Three
blocks had reserves of less than one million tonne. These
blocks include deposits of limestone, iron ore, gold and dia-
monds. Some of the smaller mines in Karnataka that did not
receive enough interest this time may be bundled and put up
for auction again.
“It is sub-optimal for mining companies to invest effort and
capital in mines that are small. The state mineral development
agencies should ideally package or prioritise the larger mines
for auction,” says Kameswara Rao, partner, PwC. He also feels
the lukewarm response could be due to softening of demand.
Balwinder Kumar, Union mines secretary, however, says this as-
pect is not a hindrance and the private sector has shown interest in
the mines on offer — JSW Steel and Essar Steel have been declared
successful bidders for some of the mines. Kumar adds an inter-
ministerial group will meet this month to understand issues like
land acquisition and environment and forest clearances that are
affecting the auction
process. The panel
will review clearanc-
es, the status of the
Mine Development
and Production
Agreement as well as
the issuance of letters
of intent.
Even though the
government claims
the recently conclud-
ed auctions were a
success, generating
interest among companies is an uphill task. Vedanta’s Chief Execu-
tive Officer Tom Albanese recently said many of the leases were
“stamp size”. There were many instances where companies want-
ed to bid but did not go ahead because of the size of the lease, he
added.
Some experts feel auctioning mineral blocks is not a good idea to
begin with. “Nowhere in the world are auctions used for mining
natural resources. Also leases are given till the deposit is fully ex-
tracted,” says R K Sharma, secretary-general of the Federation of
Indian Mineral Industries.
The MMDR Act states all mineral concessions will be granted by
state governments. But this will be through auctions for greater
transparency.
SLUMP SPURS DEMAND FOR MERGER OF RINL, NMDC
The continuation of grim scenario in the steel industry has
brought into focus the demand for merger of the Rashtriya
Ispat Nigam Limited (RINL) and National Mineral Develop-
ment Corporation (NMDC).
Visakha Steel Employees’ Congress, the recognised union of RINL,
corporate entity of the Visakhapatnam Steel Plant, feels that now
in the larger interest of the country, the Centre should respond to
the long-pending demand for the merger.

Page 8
VSEC general secretary Mantri Rajasekhar told The Hindu on
Monday that the decision would be mutually beneficial. “We
have a land bank of 25,000 acres with a large talent pool and
experience in steel making. On the other hand, NMDC, which
owns several mining blocks and supplies iron ore to RINL, is in
the process of privatising its three million tonne integrated steel
plant at Nagarnar in Bastar dis-
trict of Chattisgarh.
“Almost 40 per cent of our pro-
duction cost is going towards
iron ore. It is costing Rs.4,000 to
Rs.5,000 per tonne as we don’t
have captive mines whereas JSW,
TISCO, Essar and some individu-
al owners are spending just
Rs.1500 to Rs.2,000 per tonne,”
Mr. Rajasekhar said. RINL, a
Navratna company, incurred a
net loss of Rs.1,421 crore during
2015-16. With a slump projected in the second half of current
fiscal, the company will not make any dramatic recovery in the
near future.
Joint campaign
RINL’s representation for allotment of captive iron ore mines in
Kukunoor in West Godavari is still under consideration. The
exploration of blocks allotted in Bhilwara in Rajasthan and
sourcing of raw material after payment of Rs.369 crore for
strategic control over Bird Groups of Company have still re-
mained a far cry. The merger proposal, which was mooted by
the management itself a decade ago, was put in the cold storage
due to lukewarm response from the Centre. Now all the unions
of the RINL have decided to launch a joint campaign to press for
the merger immediately.
The RINL, after completing
6.3 million tonne expansion
project, is ramping up the
new units. It is also invest-
ing Rs.5,000 crore for capi-
tal repairs of blast furnaces
and augmenting the pro-
duction of other units to
raise the capacity further to
7.3 million tonne.
Recession has already hit all
the major steel producers,
including SAIL. The deci-
sion to continue Minimum Import Price to discourage the dump-
ing of cheap steel from China has not brought any cheer to the
steel industry as the demand for steel consumption has not ap-
preciated. “Increase in per capita consumption can be achieved
only when manufacturing and construction sectors will pick up.
Otherwise, inventory will remain an area of major concern forc-
ing steel producers to operate their units by scaling down their
rated capacity,” a top official of a private steel making unit, said.
ANIL AGARWAL LED VEDANTA ON A STEEL HUNT
NRI billionaire Anil Agarwal-led Vedanta may take the inorgan-
ic route to enter India’s steel sector, the firm’s chief executive
officer Tom Albanese said. “Acquisition is always an option,” he
said, reminding one of the fact that Agarwal had built most of
his business empire by taking over firms. A source
in the company had earlier told FE that Vedanta
wants to set up a 5-million-tonne-per-annum (mtpa)
steel plant in Karnataka, entailing around R30,000
crore as investment, along with a partner. Agarwal’s
metal and mining conglomerate is already the coun-
try’s largest iron ore producer and producer of non-
ferrous metals such as aluminium and zinc.
Agarwal had in 2010 announced the group’s plan to
foray into steel-making in partnership with Larsen
& Toubro by setting up a 5 mtpa plant at Palaspon-
ga in Odisha’s Keonjhar district in two phases and signed a
memorandum of understanding with the state government. It
had also acquired the assets of the under-construction Bellary
Steel and Alloys (BSAL) in Karnataka for R220 crore by taking
part in competitive bidding, way back in 2011. Headquartered
in Bangalore, BSAL had embarked on setting up an integrated
500,000 tpa steel plant and had lined up a plan to take it to 2
mtpa. It however, could not complete the project and ran into
debt. While the plant at Bellary is on the cards, Vedanta is also
keen to acquire existing steel plants to be a major player
in the field. There are many such assets in the country that could
potentially interest him.
“Vedanta has a strong iron ore business and also a very strong
and innovative value-added business in Goa. I do think that there
is tremendous iron ore resource in India. There will
be higher demand for steel in India. We will keep
our eyes open for opportunities for adding to our
value-added business beyond the current facility in
Goa as and when opportunities present themselves
to us,” Albanese said. Iron ore is one of the key raw
materials for steel-making and having captive
mines always helps a company to remain competi-
tive.
The immediate target, Albanese said, would be to
ensure that the company’s iron ore business and the existing val-
ue-add business remain strong. “We are trying to look around,
envision the time when urbanisation picks up in India, when you
see more government spending on infrastructure, higher ex-
penditure by Indian families demanding higher quality house-
hold items and more manufacturing capacity developing in In-
dia. We keep our options to be in a position of strength in India’s
aluminium, copper, oil and possibly steel industries,” he said.
“India’s steel capacity currently stands at around 118 mtpa and
the government targets to take it to 300 mtpa by 2030”

Page 9
Geological Survey of India (GSI) as mandated by the Union
government will identify at least 12 mineral blocks that can be
readily put up forauction, noted Mandapalli Raju, director-
general.
The present focus of exploration activities on
land is to identifyminerals in blocks such
as iron ore, manganese, copper, lime stone
and coal and GSI will identify the mineral
blocks during the current field season, which
also coincides with the fiscal year, Raju noted.
Interacting with reporters during his visit to
marine and coastal survey division of GSI
here, Raju said the surveys for mineral blocks
on request from respective state governments
are in different stages of exploration. "The
survey reports will indicate G2 status of the
blocks, that is, where they can be directly put
up for auction," Raju said, adding four of
these blocks for iron ore are in Karnataka.
"GSI will carry out exploration for 30 blocks during 2017-18,"
he added.
Noting that GSIs exploration work for yellow metal is also
underway in mineral rich Jharkhand state, Raju said the or-
ganization is also eagerly awaiting the formulation of an off-
shore mining policy for minerals such as sand, lime stone, lime
mud, and phosphorites as well. The ministry of mines will
bring out the stated policy, he said, adding that due care will
be taken to ensure it does not stand afoul of current laws of the
land including the Coastal Regulation Zone Act.
The demand for an off-shore mining policy has come from the
government of Kerala which has urged the Centre to formu-
late one law given that it is sitting on a potential deposit of
construction sand in an area of 2,797 sq km off its coast.
"We have identified this as potential area for construction sand," he
said, adding that GSI similarly has identified 4,525 sq km, lying
beyond 10-km from the coastline off AP, Tamil Nadu and Pondi-
cherry, that is rich with construction and carbonate sand.
V Devdas, deputy director-general said
once GSI indicates potential deposits of
minerals both on land and in the sea, it is
for the government to form policies for its
exploitation. As far as sand in concerned,
off shore mining of sand is an accepted
norm abroad, he said, adding that its en-
vironmental impact can be minimized by
selectively mining an area, allowing it to
rejuvenate in the interim and simultane-
ously go in for on-shore and off-shore
mining for the mineral.
GSI is in the process of acquiring a state-
of-the-art geo-technical vessel that is ca-
pable of drilling upto the depth of 30 me-
tres below the sea bed. "This will give us an accurate estimate of
mineral and other reserves below sea," he said, adding that the
tender process for the vessel is on. "We are expecting the vessel to
join us either by December 2017 or early 2018," he said. It will add
to the existing fleet of research vessels - Samudra Ratnakar, Sam-
udra Kausthubh and Samudra Shaudhikama with GSI.
About the surveys that GSI has carried out thus far, Raju said the
organization has surveyed more than 98% of 2,012 million sqkm of
Exclusive Economic Zone, including about 1,05,000 sq km of terri-
torial waters of India. GSI makes available data from its surveys to
the government and general public, he said, adding even govern-
ment and private organisations make use of the baseline data that
it generates. "We do not commercially exploit such data," Raju
said.
GSI WILL IDENTIFY 12 MINERAL BLOCKS TO PUT UP FOR AUCTION
NCC-BGR CONSORTIUM BAGS MINING DEVELOPMENT CONTRACT FOR
PACHHWARA COAL BLOCK
The NCC-BGR Consortium has been awarded the Pachhwara
North Coal Block Mine Developer and Operator Project (MDO
Project) by the West Bengal Power Development Corporation
Limited.
The consortium has been formed between NCC Limited
(formerly Nagarjuna Construction Co Ltd) and BGR Mining &
Infra Private Limited with 51:49 per cent equity.
The Pachhwara North Coal Block, located in Pakur, Jharkhand,
has been allocated by the Coal Ministry to the WBPDCL. The
coal extracted is for use for their power plants in West Bengal.
This MDO Project basically comprises of activities relating to
mine development, excavation of over burden and coal and
transportation and related activities.
The project has coal reserves of nearly 400 million tonnes and over
burden of 1650 million cubic meters. The rate of mining fee per ton
of coal is about ₹ 890 including taxes.
The total duration of the Project is about 30 years and will be ex-
tended for further period until the coal reserves are exhausted. The
peak rated capacity of the mine is 15 million tonnes per annum to
be achieved by the 6th year of commencement of operation.
The value of the project is estimated to be ₹35,000 crore over 30
years and the annual revenue at rated capacity is about ₹ 1335
crore at current prices. The contract provides for escalation of min-
ing fees. A Special Purpose Vehicle Pachhwara Coal Mining Pri-
vate Limited

Page 10
has been formed for execution of the project. The SPV entered
into the Coal Mining Agreement on October 10 at Kolkata.
BGR Mining & Infra is a coal and lignite mining company associ-
ated with Singareni Collieries Co Ltd, Neyveli Lignite
Corporation Limited and some of the subsidiaries of Coal India
Limited. As per the production schedule, 4 million tonnes of coal
is targeted to be achieved in the 1st year of Operation and yield
revenue stream, according to A A V Ranga Raju, Managing Di-
rector of NCC.
DISCLAIMER: This is a compilation of various news appeared in different sources. In this issue we have tried to do an honest
compilation. This edition is exclusively for information purpose and not for any commercial use. Your suggestions are most
valuable.
Your suggestions and feedback is awaited at :-
editor@geonesis.org
WITH MINES SECTOR OPEN, VEDANTA EYES EARLY-STAGE PROSPECTING FOR MINERALS
Vedanta Ltd will be stepping up early-stage prospecting for min-
erals to tap the opportunities from the opening up of mining
sector. Prospecting for mineral will be a key area along with oil
and gas, which will come into Vedanta’s fold with the merger of
Cairn India expected by March 2017.
Vedanta, which floated VedEX earlier this year, an entity for
early stage prospecting for natural resources, is keen to look at a
diversified range of opportunities, according to Tom Albanese,
CEO, Vedanta Ltd. In an interaction with journalists on Monday,
Albanese said the Government amending the MMDR (Mines and
Minerals Development and Regulation Act) opens up a wide
range of opportunities for Vedanta to strengthen its raw material
supply and widen its presence in mining.
“In our mind, we have lots of ideas but the government is yet to
open up all minerals,” he said. It had successfully bid for a gold
lease in Chhattisgarh earlier this year. It is hoping to tap bauxite
options and zinc-lead resources as and when they are available.
“If the geologists put together a good proposal, we will be inter-
ested,” he said.
Demand outstrips supply
Both zinc and aluminium supplies are critical issues. Zinc de-
mand is being driven by the need for coating and galvanising.
But over the last two decades, while the demand has been steady,
supplies are dwindling. The domestic demand is set to take off
with increased need for automobile and construction segments.
India exports cars that are zinc coated against corrosion, but cars
for domestic sales do not get that value addition. Similarly, con-
struction rebars are also not protected. But both these segments
are bound to open up.
Similarly, the demand for aluminium is expected to grow twice
as that of copper or steel. But the bad news is that aluminium
demand is far outstripping supply. India is rich in bauxite, the
source of aluminium oxide, which is converted to aluminium. But
social issues plague the sector.
Oil and gas
As oil prices have stabilised, the capital investment will com-
mence, he said. With the merger of Cairn India, one of the largest
independent oil and gas exploration company, with Vedanta, the
first priority will be to resume growth in its oil fields, especially
those in Rajasthan, Albanese said. The output from the Mangala
field in Rajasthan is about 200,000 barrels a day and has helped to
prevent a drop in overall production. The company is working
with ONGC and the benefits and higher production will be seen
from 2019 onwards. But in the interim, output is bound to be flat
or see a small decline.
PANEL TO EXAMINE APPLICATIONS FOR 7 COAL BLOCKS NEXT WEEK
A technical committee will meet next week to examine and eval-
uate the applications for the allotment of seven coal blocks to
power generation firms.
"A meeting of the technical committee (TC)...is scheduled to be
held on November 11, 2016...for examination/evaluation, as per
the Terms of Reference of the TC, of applications as received in
response to (Coal) Ministry's Notice inviting applications," a
notice issued by the ministry said. The eight member-panel is
chaired by the Coal Ministry's Advisor (Projects).
"It is therefore, requested to send a representative of... (ministries
like power) not below the rank of director/deputy secretary to
attend the meeting," the notice further said.
"...the applications are invited from...entities in respect of the coal
blocks," the Coal Ministry said.
The coal ministry, had, last month invited applications for the
allotment of seven coal blocks including Deocha-Pachami mine in
West Bengal with 2,102 MT reserve, Ghogarpalli and Jadunath-
pur in Odisha with 1,163 MT and 525 MT, respectively and
Pokharia Paharpur in Jharkhand with 584.25 MT.

Geonesis November 2016

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