India’s omission from Canada-based Fraser Institute’s annual survey of mining and exploration companies is set to have serious ramifications on the inflow of foreign capital and technology into the domestic mining sector.
In calendar 2019, India was excluded for the third year on the trot from the survey. The survey is a barometer of the overall Mining Attractiveness Index driven by factors like geological attractiveness, effects of government policies on exploration investment, taxation levels and quality of infrastructure. Western Australia is perched on the top of 76 mining jurisdictions across resource rich nations covered in the survey followed by Finland and Nevada (USA).
Federation of Indian Mineral Industries (Fimi) feels that the latest policy to award minerals via auctions has dimmed India's edge in investment attractiveness. Also, India's exclusion from the list of surveyed nations will deprive the country of state-of-the-art technology and foreign capital sorely needed to develop its deep seated mineral resources and cut dependence on imports. India's imports of minerals have exceeded its value of domestic output by four times in the past three to four years.
R K Sharma, secretary general, Fimi said, “The current mining policy has put India out of attractive destination for investment in mining. At one time, almost all junior and senior mining company in the world was in India following amendment of MMDR Act, 1957 in December, 1999. Today, all these companies have moved out of India because of the auction policy adopted by this country in January, 2015”.
“The Fraser Institute, a Canada based institute, which does annual survey on attractive destination for investment in mining and prospecting has removed India from the list of countries from their survey. The result will be that India will be deprived for state-of-the-art technology and investment capital particularly in deep-seated minerals, for which the country depends on imports”, he added.
Steep taxes on mining and lacklustre exploration spends have sunk India’s rankings at the previous editions of the Fraser Survey, eventually dislodging the country out of the reckoning in the past three consecutive years.
India's exploration expenditure pales into insignificance when compared with other resource rich countries such as Canada and Australia. Canada accounts for 14 per cent of the global mining exploration expenses, Australia ranks next with 13 per cent share. India's share is a minuscule two per cent. For each square km of a potential mining lease, Australia spends $5580 while Canada incurs $5310. By contrast, India spends only $9 per square km.
Unlike India, the taxpayers' money is not used elsewhere on mineral exploration, a risky business venture. The governments of mineral rich countries like US, Canada, Australia, Brazil, South Africa, Chile and Mexico create a congenial ecosystem for exploration by providing the necessary data to the private companies.
“In these countries, the privately managed entities known as junior exploration companies undertake detailed exploratory work and enjoy leeway to sell or transfer mineral concessions. The junior exploration companies take the lead in greenfield exploration by raising funds from venture capital in stock exchanges. If India were to make exploration an attractive business for the private sector, the policies need to be aligned with the practices in other resource rich nations”, said a mining industry source.