Mineral Exploration and Sustainability August 17, 2018 (Friday) Federation House, Tansen Marg, New Delhi

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1 Ministry of Mines Government of India National Summit on Mineral Exploration and Sustainability August 17, 2018 (Friday) Federation House, Tansen Marg, New Delhi 1

2 Copyright 2018 All contents in this report is the property of FICCI. Any other use, including the reproduction, modification, distribution, transmission, republication, display or performance, of the content in this report is strictly prohibited without written permission from them. 2

3 Overview of Indian Mining Sector The mining industry in any country is one of the most significant sectors as it has consequences for multiple downstream industries; making it a catalyst for the growth of basic industries such as power, steel, cement etc. with larger impact on manufacturing, infrastructure and the overall GDP. Analysis shows that every 1% incremental growth in mining and quarrying sector results in approximately % incremental growth in industrial production and correspondingly, an approximate increment of 0.3% in the growth rate of India s GDP. The nation is well endowed in terms of most minerals. The country produces as many as 95 minerals including 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals. The country has significant reserves of key minerals such as bauxite, copper, coal, chromite, diamond, gold, iron ore, lead, limestone and manganese ore among others. However, even with the rich mineral potential, mining industry in India contributes a mere % to the country s GDP. Following table depicts the untapped mineral potential in the country. 77% 86% 67% 75% 80% 79% 78% 97% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 23% Silver Ore 14% Lead and Zinc Ore 25% 20% 33% 21% 22% 3% Copper Metal Manganese Ore Chromite Iron Ore Bauxite Gold Ore Reserves Remaining Resources India has faced constraints in translating mineral potential into exploitation. One of the key constraints has been the limited investment in mineral exploration. India s exploration budget in 2015 stood at USD 17 per sq. km as against USD 35 in Brazil and USD 56 in China, which is disproportionate to its size and mineral potential. Off late the environment sustainability issues have gained lot of traction in the light of polluting environment and depleting ecosystem. However, the Indian Government has taken several initiatives to boost the contribution of mining in the Indian GDP. The MMDR Act, which had been enacted to regulate the mining industry, was amended in 2015 to increase transparency in the award of mining leases and usher in accelerated growth in the industry. The amendments also allows mergers and acquisitions of companies and facilitates ease of doing business 3

4 to improve profitability and decrease costs of the companies dependent on supply of mineral ore for their production activities. The Government is also opening up avenues to increase investments in the sector by speeding up exploration activities, inviting foreign companies to participate in mining and reducing challenges of land acquisition and other environmental hurdles. According to the reports, India can attract up to INR 1 trillion investments to improve mineral output and up to INR 50 billion for exploration activities. However, over the years, it is evident that the economic contribution by the mining sector would sustain only when the industry embeds Sustainable Development Goals in its operations. There are opportunities galore for the mining sector in India (which rests on a chest of mineral endowments) in terms of accelerated consumption, demand and exploration potential. Efficient and effective participation, both by the public and the private sector, will be the key to achieving sustainable and holistic growth of the mining industry and of the economy as a whole. 4

About the Event Federation of Indian Chambers of Commerce & Industry (FICCI) and International Institute of Corporate Sustainability & Responsibility (IICSR) along with the Ministry of Mines,

5 About the Event Federation of Indian Chambers of Commerce & Industry (FICCI) and International Institute of Corporate Sustainability & Responsibility (IICSR) along with the Ministry of Mines, Government of India organized as for boosting investments in the sector of mineral exploration focusing upon the environment sustainability. The various Government agencies (like Indian Bureau of Mines and Geological Survey of India) along with the Central and State Policy Makers, Business Owners and International and National Investors were part of the event. A platform for the Indian and Global investors, business heads, and policymakers was created for information exchange around development of mineral exploration in an environmentally sustainable manner to support the mining and downstream industries. 5

6 Event Objectives Visualizing mining industry s target for mineral exploration uptill 2030 Identifying and addressing the long-term sustainability challenges in the mining industry Boosting investments in mineral exploration; identifying the reasons for skewed investments in mineral exploration and their remedies Focusing upon environmental sustainability Disseminating knowledge around newer innovations and technologies for mineral exploration Understanding global perspective on exploration and sustainability Highlighting the importance of expediting mineral exploration and mining investments in the country Showcasing the significance of mineral exploration and mining on downstream industries 6

Event Highlights Participation from Ministry of Mines, Government of India, State Governments, Indian Bureau of Mines & Geological Survey of India Presence of Industry Stalwarts

7 Event Highlights Participation from Ministry of Mines, Government of India, State Governments, Indian Bureau of Mines & Geological Survey of India Presence of Industry Stalwarts 200+ Conference Delegates from India & Abroad Participation from across the sectors of society: Public and Private sector companies, Civil societies, Academic participation etc. 7

8 Conference Overview The programme was a half-day conference with two sessions. While the first session focused around expediting mineral exploration in the country and brining investments therein, the second session highlighted upon the need for consciousness towards the environmental sustainability and embedding Sustainable development goals (SDGs) defined by the United Nations in the mining operations. 8

Metals, Mining & Manufacturing Power Generation Cement Consultancy Construction

9 Conference Participation Speakers 11% 5% Mining Industry 37% 47% Govermnent Academician Consultancy Delegates N = 19 3% 2% 4% 7% 9% 3% 4% 4% 4% 7% 4% 3% 46% Metals, Mining & Manufacturing Power Generation Cement Consultancy Construction and Architecture Government Media NGO Metal Recycling Others Tech Providers Academics Banks 9

10 Report Launch The summit marked the launch of Sustainable Development Framework for the mining industry on the lines of 17 Sustainable Development Goals defined by the United Nations. This would be utilized by the Responsible Investors for taking informed investment decisions on sustainable businesses and mining operations. 10

11 Conference Sessions 11

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13 Industry-Government Round Table Two roundtables were conducted on the sidelines of the summit paving way for industry-government interactions and deliberations to carve out a strategic path for expediting mineral exploration in a sustainable manner in the country; addressing the challenges and identifying the conducive business solutions. 13

Marketing & Media Summary Aligned with the importance of the theme and the objectives of summit, the event was well covered by national & local media, both electronic & print The event was promoted

14 Marketing & Media Summary Aligned with the importance of the theme and the objectives of summit, the event was well covered by national & local media, both electronic & print The event was promoted through an exclusive and carefully planned multimedia campaign Extensive PR, SMS campaign, s, direct market campaign and other marketing communications were executed attracting key personnel for the programme Dedicated campaign on social media platform like Linkedin, Twitter and Facebook Personalized Invitation to Ministries & Trade Associations 14

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Testimonials Mining not only contributes directly to the Indian GDP, it also facilitates the growth of downstream sectors like steel, aluminium & others and is thus a mainstay sector of our economy.

16 Testimonials Mining not only contributes directly to the Indian GDP, it also facilitates the growth of downstream sectors like steel, aluminium & others and is thus a mainstay sector of our economy. The governments in India have always played an important role in providing conducive business environment for the sector and are continually improving the ease of doing business for the concerned industry. I would urge the Chambers like FICCI and institutions like IICSR to continue their efforts and continue this national initiative by organizing state wide informative programmes. Sh. Bipul Pathak, Joint Secretary, Ministry of Mines, Government of India It was an excellent event that not only attracted the think-tanks of the industry but also the concerned stakeholders from the government. Observations of the Joint Secretary Mines, DG GSI, CMD MECL and others were very informative. Great participation from the industry highlighted the importance of mineral exploration and sustainability in the mining landscape. I hope that this momentum will be carried forward to the mineral rich states to reform in the near future. Sh. Tuhin Mukherjee, Managing Director, Essel Mining & Industries Ltd. and Chair, FICCI Mining Committee At the outset, my congratulations to the organizers for their untiring efforts for making the event on mineral exploration and sustainability a grand success. It was an excellent forum to share ideas for expanding mineral exploration manifold and unlock maximum potential of Mining sector to make India self-sufficient in mineral production and support manufacturing. It encompassed all spheres of the industry with a high level of participation from professionals to discuss the current challenges and helped chalk out a roadmap for the future. Sh. Kishore Kumar, Director (Strategy & Business Development), Vedanta Ltd. 16

National Summit on Mineral Exploration & Sustainability was a conglomeration for Indian mining industry to reckon with.

While exploration is key to mineral production and growth, sustainability is important from long-term perspective. Sh. Pankaj Satija, Chief Regulatory Affairs, Tata Steel Ltd.

The conference sessions were coherently organized with perfect panelist for having meaningful discussions.

In order to take up long term sustainable development, integration of environmental considerations with social development plans and strategies is required.

17 National Summit on Mineral Exploration & Sustainability was a conglomeration for Indian mining industry to reckon with. Not only it provided a platform for discussion on Indian mining industry; it also provided with an opportunity to discuss upon the two key aspects of mining i.e. mineral exploration and sustainability. While exploration is key to mineral production and growth, sustainability is important from long-term perspective. Sh. Pankaj Satija, Chief Regulatory Affairs, Tata Steel Ltd. A good platform where all the stakeholders could exchange views on mineral exploration and sustainability in the context of Indian mining industry. The conference sessions were coherently organized with perfect panelist for having meaningful discussions. A lot of efforts have been directed for mineral exploration in the country and such programmes provide a platform for exchanging ideas and best practices both domestically as well as internationally. In order to take up long term sustainable development, integration of environmental considerations with social development plans and strategies is required. Exploration must incorporate the sustainable development plan for comprehensive growth. The National Summit on Mineral Exploration and sustainability was successfully conducted keeping these fundamentals in mind. I compliment the organizers for their efforts and wish them success for their future endeavours on this much needed topic of the day for Indian mining industry. Dr. Dinesh Gupta, Director General, Geological Survey of India The event was a great learning platform to share ideas and provided insights on dynamics of mining industry especially the mineral exploration. The event had flagged issues pertaining to bottlenecks for mineral exploration in the country and suggested measures to accelerate the quantum of spending on mineral exploration. This event had setup a stage to think in terms of sustainability in mineral exploration activity in India which was somehow lacking in this segment. We would invite the organizers to replicate the model in all the mineral rich states of the country to begin with the state of Rajasthan. Sh. Pradeep Agrawal, Additional Director (Geology), Department of Mines and Geology, Government of Rajasthan Attending the FICCI & IICSR initiative on mineral exploration and sustainability was an interesting experience for me. I believe that the mining and mineral industry could (and should) play a leading role in preserving the environment and responsibly work with different communities at and around their sites. I look forward to seeing the Indian mining and exploration industry join in to the steadily growing (and necessary) trend to do social good & protect our habitat while doing business. Ms. Ulrike Glatz, Founder & Director, Glatz Impact Venture 17

18 Recommendations Basis the interactions and presentations, the following recommendations are for consideration of the stakeholders: 1. In-principle statutory clearances should be taken by the Government prior to putting a block for auction. This would help in reducing the time lag between mine allocation and actual start of operations. 2. Clear demarcation No-go areas prior to auction is the need of the hour. 3. Promoting Ease of Doing Business in mining by eradicating trade barriers and global benchmarking of Royalty rates for existing blocks. 4. Subsuming Royalty, DMF & NMET in bid value for auctioned blocks along with abolition of statelevel multiple taxation. Also, tax incentives for exploration expenditure should be provided. 5. Encouraging participation of Indian and Global Junior & Mining Majors to participate in India s exploration and mining. 6. Provide for security of exploration tenure. To overcome procedural issues, grant exploration permits for at least 4 years. 7. Allocate blocks comparable to global standards in terms of size and mineral content so that sustainable mining activities can be economically carried out. 8. Creating reporting standards to international norms which could interest capital markets into exploration funding. 9. The National Mineral Exploration Trust set up through the MMDR (Amendment) Act, 2015 should be the main source of funding for exploration. It should be able to pay for some of the huge expenditure that is entailed in fully exploring the country in terms of its geological potential. 10. India should identify strategic minerals which are critical for the growth and appropriate strategy should be adopted to ensure long-term availability of such minerals. Those minerals where the nation is self-sufficient should be explored and mined domestically while for those minerals which are not available in abundance locally, international assets through acquisitions and joint ventures should be targeted. 11. In order to promote mineral exploration, the equipment / technology should be available in a cost effective manner. Duty structure should be made favorable for procurement of geo-physical / geochemical surveying instruments. 18

19 12. State Governments should publish the long term auction plan through various platforms. This will help avoid aggressive & over enthusiastic bidding and provide the bidder with most realistic assessment of long-term supply of mineral blocks. Summarizing the above, FICCI and IICSR recommends the following Six Milestones to be targeted by the industry and the Government: 1. Increasing mining contribution to Indian GDP by 1% by Ensuring long-term mineral security of the nation by Mine in India to Make in India via mineral exploration 4. Strengthening of state mining & geology systems 5. Skill enhancement for the sector 6. Embedding Sustainable Development Goals in mining industry to attract responsible foreign direct investments / impact investments in the country 19

20 Acknowledgements Federation of Indian Chambers of Commerce & Industry (FICCI) and International Institute of Corporate Sustainability & Responsibility (IICSR) would extend their heartfelt thanks to Ministry of Mines, Government of India and Sh. Bipul Pathak, Joint Secretary for providing key inputs for organizing the summit. Without their continued guidance, the event would not have seen the light of the day. We would also like to extend our gratitude to all the Government dignitaries from the central & state governments and PSUs along with other participants from the industry for their overwhelming support. FICCI would also like to thank its mining committee for conceptualizing, reviewing and supporting the programme led by the Chair and Co-Chairs. A special mention for all the speakers for sharing their experiences & expertise and for the participants for making this a hugely successful event. We would also like to thank our sponsors Vedanta, Essel Mining, Rio Tinto, Tata Steel and Hindustan Copper for supporting the event. Also, an appreciation for our media friends who are our public face for such initiatives. At the end, FICCI & IICSR acknowledges and appreciates the contribution made by one & all associated with the event. 20

21 Thank You Sponsors Supported By Ministry of Mines Government of India Platinum Sponsors Gold Sponsors Associate Sponsor 21

22 notes 22

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24 Mr. Arpan Gupta Deputy Director & Head Mines, Metals & Cement FICCI M: E: Ms. Harsha Mukherjee Managing Director International Institute for Corporate Sustainability and Responsibility IICSR M: E: 24

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