October 11, 2008

India to attract INR 100,000 crore FDI in mining – Report

Mr Subbarami Reddy union minister of state for mines said that India expects to attract foreign direct investment of INR 100,000 crore per annum in mining exploration of gold and diamond. He added that the new mining policy National Mineral Policy 2008 is expected to go through in next month's Parliament session.

Mr Reddy said that over a dozen companies from Australia, Canada and South Africa have expressed their interest in bringing technical expertise to identify the potential of a mining block, and Indian officials would soon visit these countries to explore the possibilities of more investment. He added that under the new policy, those who invest heavy risk capital will automatically get the mining lease to enable them to protect their capital, while enabling India to achieve capital intensive mineral exploration.

He said India produces 89 minerals, out of which 11 are metallic and 52 non metallic. It is estimated to have 2.92 billion tonnes of bauxite or 10% of the world's reserves and 276 billion tonnes of coal. India is also estimated to have 14,000 tonnes of gold reserves. He added that "The new policy also aims to address a major complaint of investors by shortening the time taken for granting new mining leases by state and central governments to between six months and one year. After this period, applications will be automatically referred to a tribunal."

Mr Reddy also said that after the policy announcement, states would get more royalty, which would be decided on the basis of the selling price of the mineral against the present system based on volumes.

Union cabinet has approved the policy last week after a delay of 2 years and aims to attract around USD 250 million in foreign direct investment annually in the mining sector in the next 5 years.