MINING
MAR KE T O P P O R T UNI T Y P R O F I L E | I N D I A
E X E C U T I V E S U M M A RY
India has always been home to a variety of metals and minerals
and it maintains an unchanging position as the largest producer
of sheet mica, the worlds third largest producer of coal, the
fourth largest producer of iron ore and the fifth largest producer
of bauxite. In addition to these natural resources, India also hosts
significant reserves of copper, zinc, gold and about 26 other
metallic and minor minerals. This is not news since mining has
existed in India for the last 6,000 years with the oldest lead and
zinc mines located in Karnataka, the oldest copper mines in
Khetria and the oldest gold mines in Karnataka as well.
The mining industry globally and specifically in India is
experiencing sharp fluctuations over the last few years. These
changes have been triggered by the economic slowdown,
escalating fuel prices, competition from countries like China,
floods in Australia that affected transportation costs and Indias
own fiscal policies resulting in major changes to Indias mining
industry.
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In order to adapt to these changes, Indian mining companies are
changing from being price-takers to price-makers. With iron ore,
coal and gold prices firming up, underpinned by a strong global
demand, most commodities are beating past commodity cycle
pricing trends. Mining transactions have seen a sharp rise since
2005, with global merger and acquisitions (M&A) deals spiking to
US$80 billion in 2010. Consequently, private equity (PE) players
are becoming increasingly attracted to the large amount of
short-term cash being generated by mining companies.
With high mining costs in developed countries like Canada
and the U.S., assets in India are being acknowledged as an
attractive alternative to meet a growing global demand. In
India, mining companies realize that digging deeper into Indian
soil is not enough to meet this demand, paving the way for a
new trend where acquisitions and joint ventures are emerging.
Therefore, mining companies are sourcing raw materials globally
with Indian miners open to travelling the world in search of
acquisitions. These companies are ensuring that by exporting
finished products to an eager market, India still continues to lead
as a primary source of metals and minerals worldwide.
This report digs deeper into the nature of the Indian mining
industry to explore its real potential for companies in India and
worldwide that want to share in its success.
MARKET OVERVIEW
The foundation for industrial development in any country rests
on its metallurgical and mineral supply. India has always had an
abundant supply of these natural resources which has ensured
there is no lack of raw materials like coal, petroleum, steel,
copper, aluminum and other metals. Products mined in India
include a total of 84 minerals consisting of four fuels, 49 non-
metallic industrial minerals, 11 metallic minerals and 20 minor
minerals.
Figure 1: Source: Department of Mines, Government of India
As a 6,000-year-old industry, mining in India leads in the
global production of mica and ranks among the top 10 for the
production of chromite, coal, iron ore, bauxite, manganese and
aluminium. Indias coal sector is expected to reach US$40 billion
by 2020 while metal ore is predicted to reach US$15 billion by
2016. Oil and natural gas is now a US$10 billion industry and
mining equipment is moving towards US$5 billion per year.
Keeping this trend in mind, in 2008 financial services company
Edelweiss predicted that by 2012 this industry will reach US$30
billion around 2.5 per cent of Indias GDP.
The industry is typically characterized by a large number of
small mines that operate as proprietary or partnership ventures
and in 2009 nearly 3,000 of these reported mineral production.
However, it is the public sector that plays a dominant role in
mineral production accounting for 67 per cent or approximately
US$15.67 billion of the industrys total value.
Until 2009, the industry displayed optimistic trends moving
towards higher mechanization, increased participation of the
private sector, and focused more on productivity and less on
statutory interferences. However, in the last year or so, both
internal and external forces are working against this natural
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trend. For example, in 2010 metal prices dropped as a result of
the global downturn. Indian iron ore producers were impacted
on the international front by Chinas growing popularity as a
preferred supplier by countries like Australia. The diamond export
market experienced a drop of nearly 25 per cent of its workforce
in 2010 and Indian diamond exports of cut and polished
diamonds fell by 31 per cent to US$5.2 billion.
If external forces are beyond the industrys control, its natural
growth is also being impacted by the inadequate railway
network which in turn affects cost efficiency triggered by higher
transportation costs. Even more challenging is the sectors
lack of natural resource assessment. Several areas continue to
remain unexplored and the mineral resources are not completely
assessed. The distribution of minerals in the known areas is
uneven and varies quite drastically from one region to another.
In recent times, the mining industry has also been facing
issues of large-scale displacements, dangers to animal habitats,
environmental issues like pollution, corruption and resistance of
locals and deforestation.
However, these deterrents are falling by the wayside as relaxed
statutory and regulatory policies are paving the way for
innovation and efficiency improvements. Several countries are
viewing the Indian landscape with interest, and partnerships and
collaborations in uncharted areas are increasingly more common.
OPPORTUNITIES
Over the last few years, the Indian mining sector has witnessed
a dramatic number of mining-centric M&A and fund-raising
activities as mining contractors look for ways to raise funds
for large mining projects. Even as joint ventures and alliances
continue to be forged between mine lease owners and mining
contractors creating opportunities for private equity, the
Indian government is helping out by offering a wide range of
concessions to investors. While attractive regulations are a bonus,
the real draw lies in its low labour and conversion costs, large
quantities of natural, high-quality reserves and a healthy export
market. However, one disadvantage is that that many mines are
stuck with old technologies and processes. These companies
acknowledge that they need to do a complete transformation to
gradually align their operating costs with international standards.
Costs for Indian mining companies are at least 35 per cent higher
than those of leading coal exporting countries such as Australia,
Indonesia and South Africa. To ensure maximum productivity,
these companies need to invest in new technologies, improve
processes in the planning and execution of projects and
institutionalize a comprehensive risk management framework.
These factors are opening up numerous opportunities for
international companies with strong expertise in these areas.
1. ESTABLISHMENT OF JOINT VENTURES WITH
INDIAN MINING FIRMS TO DEVELOP VIRGIN MINE
PROPERTIES
India has approximately 85 billion tonnes of mineral reserves that
remain unexplored. Along with coal, oil and gas reserves, the
mineral inventory in India includes 13,000 deposits/prospects
of 61 non-fuel minerals. Spending on mining is a small when
compared to other competing emerging mining markets and the
investment gap is likely to be covered by the private sector. India
is also now turning towards joint ventures between foreign and
domestic partners to mobilize finances and technology to secure
access to global markets.
INDIAN MINING INDUSTRY STRENGTH
Iron ore
India has 25 billion tonnes of iron ore resource.
Average metal content of 60 per cent as compared to
the world average of 40-45 per cent.
Coal
At 58 billion tonnes, India has seven per cent of the
worlds coal reserves of high ash content and relatively
lower quality.
Bauxite
Proven gibbsite reserves of nearly 3.3 billion tonnes
easy conversion to alumina.
Copper
Large gap in copper mining capacity most copper
producers import concentrate.
Zinc
Total lead-zinc ore reserves of 523 mt.
8-10 per cent metal content compared to world
average of five per cent. Demand for zinc expected
to increase at CAGR of 12 per cent over the next 8-10
years.
Gold
Gold ore reserves of 19.3 mn tonnes. Primary gold
production equalled 1,788 kg in 2009-10.
Diamonds
Total diamond reserves of 1.2 million carats;
production in 2009-10 of 4,503 carats.
Potential areas for exploration ventures include gold, diamond,
copper, lead, zinc, nickel, cobalt, molybdenum, lithium, tin,
tungsten, silver, the platinum group of metals and other rare
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metals, chromite and manganese ore, and fertilizer minerals.
While India has 7.5 per cent of the worlds total bauxite deposits,
aluminum production is only three per cent of world capacity,
indicating the need for new capacities.
The main opportunities in the mining sector (excluding coal and
industrial minerals) are in the development and production of
surplus commodities such as iron ore and bauxite, mica, potash, a
few low-grade ores, mining of small gold deposits, development
of placer gold resources located on the frontal belt of the
Himalayas, known mining deposits of economic and marginal
categories such as base metals in Bihar and Rajasthan and
exploitation of laterite for nickel in Orissa, molybdenum in Tamil
Nadu and tin in Haryana.
Australias construction and contract mining
group Leighton Holdings have two contracts
worth AU$1 billion for developing and operating
a coal mine project in Jharkhand, India.
2. EXPORT OF COAL TO INDIA QUANTITY
India meets about 70 per cent of its coking coal needs through
imports from countries including Australia, Indonesia and the
U.S. Indias coking coal requirements could increase by nearly
22 per cent to 85.34 million tonnes in 2011-12. India imported
36.1 million tonnes of coking coal in 2010, a 33 per cent annual
jump and Australia was by far the biggest supplier of coking coal
to India, contributing 84 per cent with U.S. imports accounting
for five per cent, New Zealand was at three per cent and South
Africa at 2.3 per cent. Local power producers and miners are now
scouting for coal assets in Indonesia, Australia, Mozambique and
the U.S. to ensure committed supplies and guard against price
fluctuations. This is a good time for countries with strong coke
assets to forge relationships with Indian mining companies.
While the rest of the world struggles to attain pre-global financial
crisis steel demand levels, India surpassed that level in 2009. Steel
demand in India, as measured by apparent steel consumption
(estimated as crude steel production plus imports minus
exports), grew by 12 per cent CAGR over FY03-04 to FY10-11 to
attain 72 Mt.
India is currently producing around 70 Mt of steel. This is
expected to surpass 200 Mt by 2020, on a conservative estimate.
As the steel production is set to double in the coming three
years, the coking coal demand would automatically double in the
same period. In 2008-09, with finished steel production of about
59 Mt, India required around 41 Mt of coking coal, of which 24
Mt was met through imports. This as steel demand grows 10 per
cent annually. Indian steel makers are trying to pump in more
coking coal from Canada and the U.S. as traditional markets like
Australia face challenges in meeting supply demands.
3. EXPORT OF COAL TO INDIA QUANTITY
Coal mining in India is associated with poor employee
productivity. The output per miner per annum in India varies
from 150 to 2,650 tonnes compared to an average of around
12,000 tonnes in the U.S. and Australia. Traditionally, opencast
mining has been favoured over underground mining. This has
led to land degradation, environmental pollution and reduced
quality of coal as it tends to get mixed with other matter.
Most types of coal available in India are high ash and there is
considerable scope in coal washing and beneficiation. India
is also a major exporter of iron ores and industry is looking to
improve by converting to value-added products before export.
Bharat Earthmovers Ltd. (BEML), a public sector unit
of the Ministry of Defence, manufactures dozers,
dumpers, graders and scrapers under license from
LeTorneau Westinghouse, U.S. and Komatsu, Japan.
Hindustan Motors Earthmoving Equipment
Division shares technical collaboration with Terex,
U.K. for the manufacture of wheel loaders, dozers
and dumpers. This factory has since been taken over
by Caterpillar for its Indian operations.
L&T started manufacturing hydraulic excavators
under license from Poclain, France. In 1980 and
1981, two more units, Telcon and Escorts JCB
commenced manufacture of hydraulic excavators
(under license from Hitachi, Japan) and backhoe
loaders (under license from JCB, U.K.) respectively.
Escorts JCB has been taken over by JC Bamford
Excavators Ltd. U.K. in 2003 and is now called JCB
India Ltd.
Volvo has a manufacturing unit in Bangalore.
Terex Corporation, U.S. and Vectra Ltd. U.K. have
formed a joint venture to manufacture construction
equipment in India with an investment of US$12
million. Other equipment in the Terex range are
being sold through its agents in India.
Technology leaders like Case, Caterpillar, Hitachi,
Ingersoll-Rand, JCB, John Deere, Joy Mining
Machinery, Komatsu, Lieberr,
However, India has still not been able to develop a
comprehensive solution to deal with the fly ash generated
at coal power stations through use of Indian coal. Clean coal
technologies, such as Integrated Gasification Combined
Cycle, where the coal is converted to gas, are available, but
these are expensive and need modification to suit Indian coal
specifications creating opportunities for global companies in this
field.
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Coal-based methane exploration:
CBM as an energy alternative is of immense value to a country
like India and for investors the returns can be substantial if they
invest in CBM exploration. The Indian government has already
awarded around 26 CBM blocks in different coal fields of the
country, however, CBM exploration technology is relatively new
to India and there is limited expertise or equipment to realize its
full potential. As a result, there are literally limitless possibilities
to capture a significant market share in Indias CBM drilling and
exploration equipment market.
Mining equipment:
Global demand for mining equipment is projected to increase
more than four per cent per year through 2013 to exceed $60
billion, triggered by increasing demand for commodities like iron
ore and copper. The energy demand is also not decreasing and
the two countries currently in the forefront to meet this demand
are India and China. These countries are creating a demand for
mining equipment and fuelling a demand for mined products
globally, thereby creating opportunities for machinery producers.
Innovation in the mining sector has distinctive features. It
is complex, given the many dimensions of the production
process from exploration to extraction and processing to
resource management, recycling and mine restoration. With
the downward trend in international metals and minerals prices
through the nineties, many companies have placed greater
emphasis on research projects related to improvements in the
efficiency of processes and somewhat less emphasis on the
development of new products. It is believed that about 10 per
cent of expenditures are devoted to the development of existing
or new products. Almost 50 per cent is devoted to developing
or improving processes and about 10 per cent to developing or
improving technical services.
However, the bigger challenge for Indian mining companies in
optimizing existing products and processes is that equipment
manufacturers in India do not offer technology innovations
because of low volumes and uncertain demand even though
these companies have the manufacturing facilities and design.
Some of the other reasons for not manufacturing the latest
equipment are:
1. The Indian market cannot absorb the cost of the latest
technology.
2. If manufactured in India for export markets, most of the
components will have to be imported.
3. Equipment adhering to the latest emission norms cannot be
used since the quality of fuel they require is not yet available
in India. At the same time, off-highway construction and
mining equipment do not need stringent emission norms in
India.
In India, opencast mining is definitely more popular than
underground mining. Hence, for opencast mining equipment
like draglines, dozers, dumpers, shovels and excavators, the
technology level of manufactured equipment needs to be on par
with international standards.
In the case of underground mining, the production technology
is not yet entirely mechanized. There are two different
methodologies of production bord and pillar mining and
longwall mining. The equipment required for bord and pillar
mining such as load haul dumpers and side discharge loaders are
being manufactured in India. However, the full range is not yet
being manufactured.
This obvious gap is creating opportunities for global companies to
expand their market reach.
4. RESEARCH AND DEVELOPMENT IN THE
MINING INDUSTRY
Indias numerous technology research institutes are working on
energy-related R&D. However, there is a possibility that they are
operating in a fragmented fashion. The government may get
improved recoveries on its investment by concentrating on a
few important technology areas. To begin, focus may be applied
for tighter emission standards and development of inexpensive
clean coal technologies like the extraction of methane from coal
deposits. Since R&D is a long- term and synergistic investment,
several mining companies in India have their own technology
centres. The objective of exploration technologies is to locate
large, high-grade reserves with minimal ground disturbance and
disruption to the environment. While larger companies are more
open to new technologies, smaller companies simply do not have
the know-how, resources or bandwidth to try out technology
solutions that will help them to explore at lower costs, increased
productivity and minimal damage to the environment. This results
in limited mine exploration which unfortunately affects their
growth.
Canadian mining industries are leading innovators
in telemining. In 1996, Inco, Tamrock OY, Dyno
Explosive Group and CANMET initiated a five-year
research alliance called the Mining Automation
Program (MAP) to develop telemining. MAP is
being tested in Incos Research Mine in Copper Cliff,
Ontario. The Canadian Mining and Metallurgical
Bulletin (January 2001) describes a new generation
of remote-control LHD that uses anthropomorphic
tele-presence to improve efficiency and safety in
telemining. The LHD senses and presents feedback
in a human-like fashion.
There is an obvious growing demand for exploration innovations
including global positioning systems (GPS), airborne geophysics
and low-impact seismic methods that are environmentally
friendly. Many of these companies will benefit from Dynamic GPS-
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based surveying information that can operate in real time when
ore is extracted. Planning and visualizing techniques, and the use
of satellites from optical and radar satellites to map geological
formations and new imaging technologies are currently needed.
Global companies that are pioneering telemining solutions like
underground telecommunication systems, positioning and
navigating systems, engineering, monitoring and control systems,
teledrifting and teleproduction would benefit from partnerships
with Indian mining companies. IT can process vast amounts of
information creating opportunities to integrate entire operations
from exploration to processing to marketing and sales. Integrated
systems can link accounting systems, dispatching GPS systems,
production and inventory control. The fully integrated upstream
mining processes will allow for better production co-ordination,
shipping and marketing. Process control systems are widely used
in other manufacturing industries, but underground mining has
to this point been considered too complex to make use of the
systems.
Recent improvements in information and communications
technology will allow underground monitoring of the production
cycle. Simulation studies can produce optimum crew structures,
shift schedules and use of equipment, and identify bottlenecks in
the process. The benefits are greater productivity from improved
focus on priorities, better communication among crew and clearer
expectations.
There is a need for on-board sensors and off-board diagnostics
such as vibration analysis and vital-signs monitoring that predict
equipment failures and optimally schedule maintenance.
Operational capabilities need to be extended and downtime
minimized with new and more robust engineering and materials
such as better lubricants and hot-swappable components. With
the increasing use of outsourcing for maintenance, costs can be
reduced considerably with electronic transmission of diagnostic
data.
Technology innovation offers a key opportunity for external
sources.
5. KNOWLEDGE TRANSFER
There are a number of critical proprietary items that have to
be imported by most manufacturers. These items may have
a reduced duty to make the cost of equipment cheaper and
competitive in the export market. In spite of the sharp hike in
steel prices, profitability has been better in the last two years
due to increased sales, better prices, strengthening of the rupee
and continued efforts to reduce production costs. The cost of
production needs to be further reduced and hence companies
need to work upon human resources management to improve
employee productivity.
This can be tackled by proper training of manpower and proper
use of the right talent in the right place which is currently lacking
in the manufacturing industry. Average employee wages need to
be increased to attract and retain talent.

COLLABORATION
1. Wholly Owned Subsidiary
2. Joint Venture With Indian Mining Companies
3. Liaison Office
4. Partner With a Local Trading Office
ATTRACTION FOR INDIAN MINING COMPANIES IN
B.C.
1. Coal Import
2. Joint Ventures to Develop Mines
3. Technology Transfer
4. Knowledge Transfer
Attraction for B.C. in the Indian Mining Sector
1. Establishment of Virgin Mines in India
2. Export of Coal to India
3. Mining Equipment
4. Research and Development
R E G U L ATO RY A N D CO M P E T I V E
ENVIRONMENT
Indian mining law requires that mineral concessions are granted
to companies registered in India under the Companies Act, 1956,
irrespective of the pattern of foreign holding therein. Companies
incorporated under the act can be public or private companies,
with or without limited liability. The limited liability structure can
be achieved through limitation by shares or by guarantee. Even
an unlimited company can be incorporated under the Indian
Companies Act.
Foreign direct investment is freely allowed in the mining sector.
The foreign direct investment can be approved either through
the automatic route under powers delegated to the Reserve
Bank of India (RBI) or by the government. Government approvals
are granted on the recommendations of the Foreign Investment
Promotion Board (FIPB). FDI of up to 100 per cent is allowed with
prior FIPB approval in mining and mining separation of titanium
bearing minerals and ores, its value addition and integrated
activities subject to the Mines & Mineral (Development and
Regulation) Act, 1957.
FDI is not permitted in mining of prescribed substances as listed
in a notification issued by the Department of Atomic Energy. The
automatic approval for 100 per cent foreign direct investment is
now applicable to all non-atomic minerals including diamonds
and precious stones and metallurgy and processing.
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Existing companies that may not be in the mining sector but
that have an expansion program in the mining sector, and the
existing companies in the mining sector, are also eligible for
automatic approval for induction of foreign direct investment if
they propose to increase the equity base in line with the increase
in the equity level, and bring in remittance in foreign currency
for that purpose. In a significant relaxation of the general policy
governing the process of automatic approval for foreign direct
investment for the mining sector, the automatic route for foreign
direct investment and/or technology collaboration is also
available to those who have or had a previous joint venture or
technology transfer agreement. Investors in such cases will have
to file a declaration to the RBI that they have no existing joint
venture for the same area and/or the mineral concerned.
The RBI has given permission to Indian companies to accept
investment under the automatic route without obtaining prior
approval of RBI. The investors are required to notify the regional
RBI officer of receipt of inward remittance within 30 days and
file required documentation within 30 days of issue of shares to
the foreign investor. This facility is available to the non-resident
Indians and overseas corporate bodies as well.
For proposals not fulfilling the parameters for automatic approval,
i.e. foreign direct investment exceeding the prescribed ceilings
for automatic approval, or in cases where the proposal is for
acquisition of the existing shares, and in cases where investors
have an existing joint venture for the same area and/or the
mineral concerned, government approval is necessary.
Indian companies receive automatic approval for technology
transfer agreements with foreign companies provided that the
terms of payments satisfy the following conditions specified by
the government:
1. The lump sum know-how fee payable does not exceed US$2
million.
2. Royalty payments do not exceed five per cent of domestic
sales and eight per cent of exports.
Payments are subject to an overall ceiling of eight per cent of
total sales over a 10-year period from the date of agreement
or over a seven-year period from the date of commercial
production. These payments may be net of Indian taxes.
The Mines and Minerals (Regulation and Development) Act, 1957
lays down the legal framework for the regulation of mines and
development of all minerals other than petroleum and natural
gas. The central government set out the Mineral Concession
Rules, 1960 for regulating grants of prospecting licences and
mining leases for all minerals other than atomic minerals and
minor minerals. The state governments have set the rules
for minor minerals. The central government has also laid out
the Mineral Conservation and Development Rules, 1988 for
conservation and systematic development of minerals. These are
applicable to all minerals except coal, atomic minerals and minor
minerals.
Recent reforms in the mining sector:
Open import of mining equipment is allowed.
State governments are entitled to give permission to private
players in all the non-fuel non-atomic minerals except
10 minerals that includes iron ore, bauxite, copper ore,
manganese ore and gold.
State governments are allowed to renew/transfer licenses/
mining leases even for the 10 scheduled minerals without
referring to the central government.
For exploration and mining of diamonds and precious
stones, FDI of up to 74 per cent is permitted under the
automatic route.
For exploration and mining of gold and silver and minerals
other than diamonds and precious stones, FDI is allowed up
to 100 per cent under the automatic route.
For metallurgy and processing, FDI is permitted up to 100
per cent under the automatic route.
Private Indian companies setting up/operating power
projects as well as coal and lignite mines for captive
consumption are allowed FDI up to 100 per cent.
100 per cent FDI is allowed for setting up coal processing
plants subject to the condition that the company shall not
do coal mining and shall not sell washed coal or sized coal
from its processing plants in the open market and shall
supply the washed or sized coal to those parties that are
supplying raw coal to processing plants for washing or
sizing.
For FDI proposals not meeting the above mentioned
guidelines, approval will be given by the Foreign Investment
Promotion Board keeping in mind parameters such as
project size, commitment of external resources for funding
project costs, the companys mining track record and
financial strength, level of technology and Indias Partner
Equity holding.
M A R K E T E N T RY S T R AT E G Y
Canadian mining companies can establish either comprehensive
or project-based business joint ventures with local firms.
Partnership with local companies is recommended in the early
phase of market entry for small and medium enterprises. If the
response from key clients is favourable, it is also worthwhile to
open an office in India.
International companies need to understand the government
JUNE 2011-05-25
system of operation, therefore, working with a local liaison or
trading office can be a shortcut for these companies.
A foreign company has the following options as part of its market
entry strategy:
Wholly owned subsidiary company:
This is treated as an Indian company for all regulation purposes.
At least two shareholders are mandatory for a private limited
company and seven for a public limited company.
Joint venture with an Indian partner:
Preferably with majority equity participation. This is also treated
as an Indian company. Such strategic alliances are forged with
local companies having substantial experience and expertise in
the relevant line of activity.
Liaison office:
This is treated as a foreign company. Its role is limited to
collecting information about the possible market and providing
information about the company to prospective clients. Such
offices act as listening and transmission posts, and are not
allowed to undertake any business activity or earn any income in
India unless authorized by the Reserve Bank of India.
Project office:
This is treated as a foreign company, intended for implementing
specific projects.
Branch office:
This is treated as a foreign company, with the majority engaged
in manufacturing, trading and consulting, and requires prior
approval from the Reserve Bank of India. Canadian companies
planning to export mining equipment to India are advised to
check with Indias Directorate General of Mines Safety (DGMS)
if its approval is required for their specific mining equipment.
A list of equipment approved and the procedure for obtaining
approval is also available on the website:
http://www.dgms.net/approval_list.htm.
Partnering with a local liaison or trading office:
The Indian mining industry actively seeks foreign equipment.
Procurement by Indian public and private sector mining
companies is generally based on an open tender system with
global tenders for large projects. The tender system generally
entails a two-bid system, a technical bid and a commercial
bid. The commercial bid is only open for bidders that meet the
technical requirements. Price, quality, track record, conformity
to specifications and ease of maintenance are some of the key
factors taken into consideration in selecting a vendor. As the
tender system requires constant interaction with the buyer, it is
advisable to retain a local agent or representative to keep abreast
of the latest developments.
Companies planning to market products that require regular
maintenance or availability of spares should be sure to convince
the buyer of availability of training and after-sales service. In
major tenders for procurement of mining equipment, Canadian
companies may consider bundling their offer with an attractive
financial package to gain a competitive advantage.
Some foreign companies already have either technical
collaborations or joint ventures with Indian mining equipment
manufacturers. Mining has been classified as a manufacturing
activity under the Export Promotion Capital Goods (EPCG) Scheme.
Capital goods imported for mining would qualify for reduced rates
of customs duty subject to certain export obligations.
FOREIGN MINING COMPANIES IN INDIA
Pebble Creek Resources Ltd., Canada,
Meridian Peak Resources Corp., Canada
Anglo American Exploration (India) BV,
Netherlands
Met Dist Group, U.K.
Phelps Dodge Exploration Corporation, U.S.
Transworld Garnet Co. Canada
Rio-Tinto Minerals Development Ltd. U.K.
BHP Billiton, Australia
Direct Investment:
Indias Foreign Direct Investment (FDI) policy states that inflows
have been permitted up to 100 per cent exemption under the
automatic route omitting atomic minerals and fuel minerals making
it easy for global investors who plan to enter the Indian mining
sector.
1. The exploration and mining of diamonds and other precious
stones have been permitted FDI inflows up to 74 per cent.
2. 100 per cent FDI has been permitted to silver and gold mining.
3. Automatic approval for FDI Inflows have been eased for those
areas that have or have had an experience in the mining
industry as a JV concern or any other way.
4. FDI will be permitted up to 100 per cent in accomplishing
power projects.
5. Coal and lignites set up by Indian concerns are exempted from
FDI caps.
6. FDI Inflows are permitted up to 100 per cent in establishing
coal processing units provided the company is not involved in
coal mining.
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C A S E S T U DY
Recent memoranda of understanding (MOUs) between
Canada and India should facilitate greater access for
Canadian companies to investment and other opportunities
in Indias mining sector.
An MOU focused on developing and reinforcing co-
operation in the fields of earth sciences and mining
has been signed between Canadas Department of
Natural Resources and Indias Ministry of Mines. The MOU
establishes a framework for co-operation in areas such as
exploration, technical and environmental matters, and the
encouragement of improved market access and bilateral
investment.
Another MOU was signed between Indias Ministry of Mines
and Ontarios Ministry of Northern Development, Mines
and Forestry. This MOU indicates a desire on the part of
Ontario and India for developing and reinforcing their co-
operation in geology and mineral resources. It is intended
to promote opportunities for mineral development and
investment between the two jurisdictions, and provides for
co-operation on a broad range of mining sector activities,
such as geosciences development, mineral exploration, mine
development, mines rehabilitation, health and safety, and
value-added processing.
An MOU similar to the two above is expected to be signed
soon between India and Quebec.
In November 2010, in a bid to strengthen the mining accord
signed between Ontario and India, a delegation from the
Canadian province, headed by the mines and forestry deputy
minister of Ontario and nine mining supply and services
companies visited India. The delegation was focused on
encouraging collaboration between the companies of
the two countries and to share technologies, services and
expertise, according to Deputy Minister, David OToole.
There is a direct relationship between the needs of the
Indian mining industry and the kind of services we provide,
he told reporters at a press briefing. OToole also said that
Ontario especially was looking for public-listed private- K EY CO NTAC TS
partnerships between the two states and also for mine
acquisitions in the resource-rich province.

Indian mines minister B. K. Handique and his counterpart

from Ontario signed an MOU in July 2010 to promote Asia-Pacific Business Centre
research, collaboration and mutual investment in the Suite 288 - 800 Hornby Street
minerals sector. (corner of Robson and Hornby)
Vancouver, B.C.
Rather than letting it remain just a government-to- V6Z 2C5
government initiative, the Ontario government is keen to
Tel: 1-604-660-9727
involve private sector participation in its ventures as well.
Toll free: 1-888-880-ASIA (2742)
www.britishcolumbia.ca
The Ministry of Mines and the Department of Natural
international@gov.bc.ca
Resources, Canada entered into a co-operation program
in geosciences by signing an MOU in April, 2003. A Joint
British Columbia Trade and Investment Representative
Working Group (JWG) was formed to implement the MOU
Office
and five meetings have been held so far. The fifth meeting
#660/1, Akshaya, First Floor
was held on May 27, 2008 in Canada. With a view to enhance
100 Feet Road, Indiranagar
the co-operation program between the two countries a
Bangalore - 560 038
Memorandum of Understanding was signed between India
Tel #s +91 80 41161216 / 40933650
and Canada on June 27, 2010, for co-operation in the field
of geology and mineral resources during the visit of Indias info@canadaspacificgateway.in
Prime Minister to Canada.

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