Mining exploration not enough but new law could bring more funding

Canada and Australia top the list of countries which spend on mineral exploration with 19% and 12% respectively of global share

Despite being a mineral-rich country, India’s share in the global exploration budget has been less than 0.5 per cent, which might explain why the country’s proven reserves are only 5-10 per cent of the estimated total resources.

Canada and Australia top the list of countries which spend on mineral exploration, with 19 per cent and 12 per cent, respectively, of the global share.

Exploration of minerals, except petroleum, has been primarily constrained by funding crunch, which is why unproven resources in India are more than twice the proven reserves.

For instance, India has gold resources of 490 million tonnes but only 17 per cent of it has been explored and marked as reserves. Similarly for coal, of total resources of 280 billion tonnes, 40 per cent is available as reserves and for iron ore with 25 billion  tonnes  of resources, 28 per cent are reserves. India produces 87 minerals.

A senior official from the Geological Survey of India (GSI) said government funding was inadequate for carrying out exploration on a big scale.

“Despite that, we are in the process of modernising land, aerial and marine survey systems, with acquisition of the latest technology,” he said.

To train scientists in the latest techniques of exploration, the ministry of mines is close to signing an agreement with Geoscience Australia.

“We will send three geologists from GSI next year for on-project training for deep-seated minerals. They have agreed to train our people. Australia and Canada have the best exploration technology," a senior ministry official said.

GSI is the principal agency for locating or identification of new mineral deposits in the country, with a mandate to explore (through ground, airborne, satellite and marine surveys) and scientifically assesses mineral and energy resources.  According to a senior analyst, there are many infrastructure and regulatory challenges in the mining industry, which need to be addressed.

Kameswara Rao, leader, power and mining, PwC India, said the major part of Indian mining products were consumed locally, while the mining industry in Canada and Australia was export-oriented. This is why more efforts are put on exploration.

“Mining contributes only 2-2.5 per cent to India’s GDP (gross domestic product), while it is about nine per cent for Australia and 12 per cent for Indonesia,” Rao added.

According to a report by the Federation of Indian Chambers of Commerce and Industry, GSI has identified 571,000 square km as obvious geological potential area in the country, but there is hardly any detailed mineral exploration activity in the absence of timely follow-up action on the recommendations.

It also said that mandatory exploration for the operating mines and adequate incentives for green filed exploration need to be devised to enhance the resource base and convert them to reserve category.

Rao says the government needs to give more emphasis to licensing process and encourage companies to join pure play mining sector. "Except for NMDC and Coal India, we do not have much mining companies," he said.

Through a new law, India has recently introduced exploration licenses but it would take time and a lot of administrative support before companies actually come and start exploring minerals since it is a high risk activity.