Gold mining to attract huge FDI

Press Trust of India

MUMBAI, March 23: India is expected to attract foreign direct investment of Rs 1,00,000 crore per annum in mining exploration of gold and diamond in the country, a top minister has said. The new mining policy National Mineral Policy 2008 is expected to go through in Parliament session next month, Union minister of state for mines Mr Subbarami Reddy said. Nearly 14 companies from Australia, Canada and South Africa had shown keen interest in bringing their technical expertise required for identifying the potential of a mining block, Mr Reddy said, adding that the government officials would be visiting these countries to explore the possibilities of more investment.

Under the new policy, entrepreneurs who invest heavy risk capital will automatically get the mining lease. This will enable and protect their capital because to achieve the exploration of minerals we need heavy money.

The policy was approved by the Union Cabinet last week after a delay of nearly two years, and aims to attract FDI to the tune of $250 million annually in the mining sector in the next five years.

India has a mineral area of 18.5 lakh sq km, but lacks the technology and capital to exploit them. But once the new policy comes into effect, global entrepreneurs would flock India with technology and capital, Mr. Reddy said.

India produces 89 minerals, out of which 11 are metallic and 52 non-metallic. The country is estimated to have 2.92 billion ton of bauxite, or 10 per cent of the world's reserves, and 276 billion ton of coal. It also has 14,000 ton of gold reserves, but the country only produces three ton of total annual demand of 800 ton. The demand for gold in India is expected to go up to 1,200 ton per annum, Mr Reddy said.

An amendment to make the required changes in the existing Mining Act will be introduced in the ongoing session of Parliament. The new policy will shorten the time it takes for new mining leases to be granted by state and federal governments to about six months to a year. At the moment it is often a long and tortuous process.

Under the new guidelines, foreign and domestic firms should find it easier to invest in the exploration and mining of gold, diamonds and metals like copper and zinc, and prospecting companies will automatically obtain a mining licence.

On the royalty issue, the minister said that after the policy announcement, states would get more royalty, which would be decided on the basis of the selling price as against the present tonnage basis.

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