Knowledge Partner
Sustainable Mining Catalyst for Inclusive Economic Growth
TITLE Sustainable Mining – Catalyst for Inclusive Economic Growth
YEAR July, 2014
AUTHORS Public & Social Policies Management (PSPM) and Wholesale Banking (WB), YES BANK
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YES BANK Ltd. Federation of Indian Mineral Industries (FIMI) Sanjay Palve R. K. Sharma Senior Group President & Senior MD Secretary General Tushar Pandey Senior President, PSPM FIMI House B-311, Okhla Industrial Area Registered and Head Office Phase I, New Delhi - 110 020 9th Floor, Nehru Centre, Tel : +91 11 2681 4597 CONTACTS Dr. Annie Besant Road, Fax : +91 11 2681 4594 Worli, Mumbai - 400 018 Email : [email protected] Tel : +91 22 6669 9000 Website : www.fedmin.com Fax : +91 22 2497 4088 Northern Regional Office 48, Nyaya Marg, Chanakyapuri New Delhi – 110 021 Tel : +91 11 6656 9000 Email : [email protected] [email protected] Website : www.yesbank.in
FOREWORD
Mining is one of the key drivers of economic development, investment and employment generation in the country. Though India is the 4th largest mineral and iron ore producer, the sector's share in the total GDP has remained flat at approximately 2% over the last 15 years. With over 80 billion tons of untapped mineral reserves, India's Mining & Minerals sector has the potential to contribute up to INR 11.25 lakh crore to GDP and create 15 million jobs by 2025.
The demand for various metals and minerals is expected to grow 4-5 times over the next 15 years (9-11% growth per annum) driven by huge demand stemming from rapid urbanization and growth in the manufacturing sector. Despite its enormous potential, the sector is plagued with regulatory challenges, unresolved policy issues, inadequate infrastructure facilities and environmental and capacity issues. The Government needs to augment its policy framework and encourage institutional innovation to revive growth momentum in the sector.
In this regard, the Mines and Minerals Bill will pave the way for high-tech exploration in new blocks, foster competition and ensure adequate compensation for displaced communities. Additionally, sustainable development based on a Social Equity Model is the key to ensuring that economic benefits of mining related activities are shared with the local communities in a fair and equitable manner. Further, incentivizing investments and rationalization of taxes will make India more competitive in the sector.
I am pleased to present the FIMI - YES BANK Knowledge Report 'Sustainable Mining: Catalyst for Inclusive Economic Growth' which highlights policy measures critical for the growth trajectory of the sector.
I am confident that the contents of this knowledge report will provide important insights for realizing the true potential of our resourceful Mining and Minerals industry.
Thank you. Sincerely,
Rana Kapoor Managing Director & CEO
CONTENTS
1. Mining as a ‘Growth Engine’ of Development ...... 1
1.1 Mining - The Economic catalyst ...... 2
1.2 Global Scenario and Developments ...... 6
1.3 An Indian Perspective...... 8
2. Sustainable Mining – Imperative for Socio Economic Balance ...... 15
2.1 Institutional framework under Mining– Centre and State ...... 18
2.2 Policy and Regulatory Environment...... 22
2.3 Governance in Mining ...... 25
2.4 Making Policies Sustainable for Inclusive development...... 27
3. Sustainability Practices in Mining – Case studies – India, Canada, Australia & South Africa...... 35
4. Mining Industry - Key Challenges ...... 45
5. Social Equity Model of Development – Ensuring Sustainable Growth in the Sector...... 51
6. Way Forward ...... 57
01 Mining as a 'Growth Engine' of Socio-Economic Development Mining as a 'Growth Engine' of 01 Socio-Economic Development 1.1 Mining – The Economic Catalyst
Mining is one of the core sectors bolstering economic development and growth. It not only Acts as a catalyst contributes to GDP but also acts as a catalyst for the growth in for growth in other core sectors like Manufacturing, Infrastructure, Power, Steel, other core Cement etc. Primary activities in the sector industries like therefore fuel growth in an economy. Hence, it power, steel, is important from India’s perspective to optimally utilize its mineral resources to attain cement, etc. the necessary industrial growth and achieve a which are critical balanced socio economic development. To for the overall achieve this it is imperative to drive investments in scientific exploration, promote development of sustainable mining practices, involve greater the economy private sector involvement and conduct geoscientific research and development.
Mining as an industry has vast implications on the development of an economy through its multiplier effect on growth. It has the potential to influence and shape economies directly and indirectly through generation of
2 | Sustainable Mining – Catalyst for Inclusive Economic Growth employment opportunities, increasing government revenues, attracting foreign direct investment, earning foreign exchange from exports leading to vast opportunities for driving economic growth.
There exists strong linkages between Mining and global growth, with mining as a prerequisite to sustain and accentuate any form of growth stimulus activity. The following graphs display these trends:
• Close linkages between Global GDP growth and demand for Metals
Over the last few decades (1970-2009), demand for metals has been observed to follow Global GDP time indicating a high degree of correlation between the two variables. The figure below displays patterns of correlation.
Figure 1: Linkages between Global GDP growth and Demand for Metals r a
e 30 y
s
u 20 o i
v 10 e r 0 p
m -10 o r f
-20 e
g -30 n
a 1 6 0 4 8 2 6 0 h 7 7 8 8 9 9 9 0 0 1 9 98 92 9 9 9 9 0 0 0 C 1 1 1 1 1 1 2 2 2
1 %
Global GDP Aluminium Copper Zinc
Source: State of the Market: Mining, Intierra RMG
Sustainable Mining – Catalyst for Inclusive Economic Growth | 3 Case Study: Mining the 'Turnaround' story for Brazil
Mineral Exports: Brazil’s mineral exports drastically improved its external balance from a highly negative position in the 1990’s to a positive one of US$50 billion by 2010.Minerals grew to account for 33% of Brazil’s total exports by 2010 (from 22% in 1995).
Foreign Direct Investments: Over the recent years, the share of mining in FDI inflows has varied between 3% and 24%. The mining sector however does play a larger relative role in terms of national investment.
Total Direct Employment: Total direct formal employment in 2009 in the extractive sectors accounted for almost 300,000 persons. The mining sector alone accounted for 232,000. This however represents less than 1% of the total occupied labour force of Brazil. But it is important to note that in Southeast Pará, employment was highly significant accounting for nearly 20% of total employment. Moreover, the indirect effects are also large.
Source: The mining sector in Brazil: building institutions for sustainable development, ICMM, April 2013
The mining industry also plays a vital role in the world economy primarily due to its position in the resource supply chain. It has been responsible for stimulating growth in many countries and has markedly contributed towards socio economic development and poverty reduction. Many surveys have also revealed that foreign exchange earnings from mining have positive developmental effects. Hence, the Mining industry is gradually gaining importance due to its spillover effects bolstering other policy objectives of job creation and poverty reduction
Sustainable Mining – Tool for Economic growth: Mining plays a very significant role in determining economic progress and can be used as a tool for promoting inclusive growth. This makes the 'Sustainability' aspect of mining critical to understand and implement. The various shortcomings of mining have made it imperative to adopt strategies and practices which are sustainable in the long run. Community involvement in decision making and execution is critical to ensure the benefits reach grassroot level. Moreover, sharing benefits with local communities and consciously adopting environment friendly techniques are vital to bolster sustainable mining initiatives.
4 | Sustainable Mining – Catalyst for Inclusive Economic Growth Figure 2: Sustainable Mining Constituents
Community Government
Aim Aim üShare in mining üMaximize revenue to wealth the state üSocial growth and üProvide infrastructure expansion and social services üPreservation of üProtect Environment culture, heritage and and heritage environment Challenges Challenges üMultiple agencies üLack of effective involved with the delivery government üLimited willingness of üPolicy delay, Mining industry uncertainty and Outcome bottlenecks üSocial unrest and Outcome frustration üLack of effective delivery to last mile communities üLack of Revenue maximization Mining üJudiciary stepping in to protect community Constituents interest
Business
Aim üReturn on Capital üRetain license to operate Challenges üGovernment Expectations and multiple agencies üPolicy uncertainties and bottlenecks üGovernment requirements for royalties, taxes, profit share, and social spend can erode profitability üInability to understand and meet community needs Outcome üRisk and Uncertainty
Source: YES BANK Analysis
Sustainable Mining – Catalyst for Inclusive Economic Growth | 5 1.2 Global Scenario and Developments
Figure 3: Global Exploration Projects
Source: Raw Material Database
Over the last decade, the nominal value of world mineral production experienced a drastic rise.
The value in 2010 was nearly four times than that in 2002. During this period the rise in the value of world mineral production was higher than the rise in the world gross domestic product (GDP). This was largely attributed to the exceptional performance of China, India and other emerging economies along with the sharp rise in commodity prices. This period contrasts with the period 1992-2002 that saw zero nominal growth after adjusted for inflation. Figure 4: Annual Global Output in Metric Tonnes (2013)
Ore (Mt) Waste Total
Metals Mines 7,000 13,000 20,000
Aggregates 15,000 0 15,000
Coal Mines 8,000 7,000 15,000
Industrial Minerals 1,000 1,000 2,000
Total 31,000 21,000 52,000
Source: State of the Market: Mining, Intierra RMG
6 | Sustainable Mining – Catalyst for Inclusive Economic Growth Figure 5: At the commodity level 2013
Mined (‘000t) Price (US$/t) Value PA (US$ bn) Coal 7,800,000 85 663 Iron Ore 1,900,000 130 247 Copper 17,000 7,100 121 Gold 2.65 42,300,000 112 Nickel 1,700 14,000 24 Zinc 13,000 1,800 23 PGMs 0.48 30,300,000 15 Diamonds 0.025 580,000,000 14 Bauxite 240,000 45 11 Lead 3,600 2,000 7 Top Ten Total 9,975,000 NA 1,237
Source: State of the Market: Mining, Intierra RMG
Figure 6: Exploration Expenditures in Figure 7: Global Drilling Activity (Number of the World by Commodity District Prospects Drilled)
1200
1000
800
600
400
200
0
Other Zinc Silver Gold Copper
Source: The Mining Journal, September 2013 Source: State of the Market: Mining, Intierra
According to the Mining Journal, September 2013, global drilling has experienced a decline since the end of 2011 and is continuing, with drilling reports available on 1,053 prospects in June 2013 quarter versus 1,479 in the previous quarter. This was further lower than the 2,072 prospects drilled in September 2012 quarter.
In the last few years, the Global Mining industry has experienced decline in prices with little prospects of early recovery due to lackluster demand. In addition to significant pressure on operating costs and a heightened threat of resource nationalism.
The scenario has further aggravated due to the restricted supply of finances, especially for mineral exploration.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 7 Figure 8: Market Value of Top Mining Companies (in billion U.S. dollars)
Newmont Mining, U.S. Goldcorp, Canada Barrick Gold, Canada Angla American, UK Coal India Ltd, India Glencore International, UK Xstrata, UK China Shenhua Eneragy, China Vale, Brazil Rio Tinto, Australia/UK BHP Billiton, Austrailia/UK
0 50 100 150 200
Source: Statista, the Statistics Portal Market Value in billion U.S. dollars 1.3 An Indian Perspective
The Indian Mining sector has been recognized as an important sector supporting India’s GDP and catalyzing growth in the manufacturing sector. It contributes nearly 2 percent of the National GDP. India has also been ranked 4th with respect to the volume of minerals produced after China, United States and Russia according to the Report on Mineral Production by International Organizing Committee for the World Mining Congress. India is a well endowed mineral abundant nation but has still a long way to achieve is nascent potential.
India produces about 87 minerals, of which 4 are fuel minerals, 10 metallic minerals, 47 non-metallic minerals, 23 minor minerals and 3 atomic minerals. Minerals can be broadly classified as fuel and non-fuel minerals1. There are mainly four fuel minerals – Coal, Lignite, Petroleum and natural gas. Atomic minerals could also be included under this category. These fuel minerals are mainly used for the generation of electricity2.
Non-Fuel minerals can also be classified into metallic and non-metallic minerals including minor minerals. Metallic minerals are mainly those that can be melted to create new products, whereas non-metallic minerals are those that cannot be melted to make new products and are mainly sedimentary rocks.
1 Source: Report on Mineral Production by International Organizing Committee for the World Mining Congress. 2 Source: www.mines.nic.in
8 | Sustainable Mining – Catalyst for Inclusive Economic Growth Despite the growing importance of the Mining sector in the As per analysis conducted for every economic progress of a country, one percent increment in the its contribution to GDP has been growth rate of mining and quarrying declining over time. In 1992-93, an incremental growth of 1.2 – 1.4% the sector contributed 3.4% of is observed in industrial production India's GDP. This figure declined to 3.0% in 1999-2000 and 2.3% a n d c o r r e s p o n d i n g l y , a n in 2009-10. Over the last few approximate increment of 0.3 years, the sector contracted percent in the growth rate of India's further with its contribution GDP3 standing at about 2% in 2012-13.
Figure 9: Mining Scenario in India since Independence
1947 1956 1972 Present
The Mining Sector The Central Government Mineral Exploration India is the largest producer flourished after promulgated Industrial Corporation of sheet mica, the third independence primarily Policy Resolution; established to largest producer of iron ore due to the impact of conduct exploration The exploration of and the fifth largest producer the successive Five Year with focus on coal, minerals was intensified of bauxite in the world; Plans iron ore, limestone, and the Geological dolomite and Crude steel production in Survey of India was manganese ore India expanded at a CAGR of strengthened; 6.8 per cent over 1980-2011;
Indian Bureau of Mines India accounted for 7.3 per was established to look cent of the metals and mining after the scientific industry in the Asia-Pacific development of mineral region in 2011 resources
Source: YES BANK Analysis
3 Source: Development of the Indian Mining Industry–Way Forward, FICCI Mines and Minerals Division, October 2013
Sustainable Mining – Catalyst for Inclusive Economic Growth | 9 1.3.1 Mines in India
The Indian Mining industry comprises of several small operational mines. 3,108 mines in India reported mineral production in 2012-13 versus 3236 in the previous year. Of the 3,108 mines reported, the 93.92% of mines were reported in Andhra Pradesh (583), followed by Rajasthan (374), Gujarat (350), Madhya Pradesh (300), Tamil Nadu (281), Jharkhand (280), Odisha (175), Chhattisgarh (165), Karnataka (160), Maharashtra (139) and West Bengal (121)4. Figure 10: Mines in India
Source: CSI India
India is one of the most mineral rich countries in the world with major concentration in Eastern and Southern India.
4 Source: Ministry of Mines, Government of India, Annual Report 2012-13
10 | Sustainable Mining – Catalyst for Inclusive Economic Growth 1.3.2 Mineral Production
Mineral production during 2012-13 was reported from 32 States/Union Territories (actual reporting of MCDR and fuel minerals from 21 States and estimation of minor minerals for all 32 States/Union Territories) of which 88% of the value of mineral production was confined to 11 States (including offshore areas) only.
Figure 11: Value of Mineral Production (By Groups) 300000
250000 e r
o 200000 r C
s 150000 R
n i 100000 e u l
a 50000 V 0 2008-09 2009-10 2010-11 2011-12 Non-Metallic Minerals including Minor Minerals 25,000 30,000 40,000 40,000
Metallic Minerals 35,000 30,000 45,000 45,000 Fuel Minerals 1,15,000 1,38,000 1,55,000 1,55,000
Source: Ministry of Mines, Government of India, Annual Report 2012-13 Figure 12: Index of Mineral Production
Index of Mineral Production (Base 2004-05 = 100) 132 130 128 126 x
e 124 d n
I 122 120 118 116 2008-09 2009-10 2010-11 2011-12 2012-13
Index of Mineral Production (Base 2004-05 = 100) Source: Ministry of Mines Annual Report 2012-13
The leading position with respect to the value of mineral production is held by offshore areas contributing a share of 21.6% to national output. This is followed by Odisha with a share of 11.56% followed by Rajasthan (9.58%), Jharkhand (8.88%), Andhra Pradesh (7.98%), Chhattisgarh (6.91%), Gujarat (5.95%), Madhya Pradesh (5.27%), Assam (4.45%), Goa (3.09%) and Uttarakhand (2.72%) in the total value of mineral production. The remaining 21 States and Union Territories have an individual share of less than 3%, together accounting for 12% of total value during 2012-13.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 11 Figure 13: Share of States in Value of Mineral production Share of States in Value of Mineral production 2013-14 (Estimated)
Uttar Pradesh 2% Assam West Bengal Remaining States 5% 4% Madhya Pradesh 9% 5% Gujarat 6% Chhattisgarh 7% Offshore 22%
Jharkhand 7%
Andhra Pradesh 9% Rajasthan Odisha 13% 11%
Source: Annual Report 2012-13, Ministry of Mines, Government of India 1.3.3 Mineral Exports in India
Given the nascent stage of mining in India, the mining industry is expected to experience an accelerated growth in exports demand. The key minerals that are exported from India are iron ore, alumina and chromite. As per global forecasts the demand for these minerals is likely to increase in the near future. The following figure gives the growth predictions of steel production, cement demand and thermal power capacity. Global demand for both iron ore and aluminium is expected to grow at the rate of 10% whereas the global demand of ferrochrome is predicted to grow at 7% per annum in the coming years.5
Figure 14: Trends in Crude Steel Production, Cement Demand and Thermal Power Crude Steel Production Cement Demand Thermal Power (Mn tonnes) (MTPA) capacity (GW) 120 400 200 100 300 80 150 60 200 100 40 100 20 50 0 0 0 2005 2010 2015E 2005 2010 2015E Source: Morgan Stanley, Cement Manufacturers Association, Economist Intelligence Unit, Ministry of Power and Planning Commission, Government of India
5 Source: Morgan Stanley, Cement Manufacturers Association, Economist Intelligence Unit, Ministry of Power and Planning Commission, Government of India
12 | Sustainable Mining – Catalyst for Inclusive Economic Growth The last few years saw a significant decline in the production of minerals, especially iron ore. After the global meltdown and export ban in Karnataka and Goa, exports of iron ore declined markedly from 117.36 million tonnes in 2009-10 to about 60.6 million tonnes in 2011-12. The 30% export duty on iron ore and the higher railway freight charges for iron ore exports have exacerbated exports today and have become unviable in comparison to the international prices of 130 USD per tonne6.
As per the current policy, up to 64% of Fe content in iron ore is permitted to be exported3. These are mainly exported to China (nearly 90%), followed by Japan and Korea. In totality, the iron ore consumption in India has increased at a CAGR of 15.1%. This value stood at 55.52 million tonnes in 2005-06 and increased to 111.4 million tonnes in 2010-11. Currently, India needs at least 140 million tonnes (MT) of iron ore for its consumption and aims to achieve a steel production target of 300 million tonnes per annum (mtpa) by 20257.
1.3.4 Forest Cover under Mining
Currently, the mining industry in India is yet to reach its full potential as vast deposits of minerals are mostly located in dense forest areas or areas that are considerably populated. As per statistics, the mining areas under deep forest with avg. forest cover for 50 major mineral producing districts is 28%. These regions also have tribal habitation. As a result, there is a greater responsibility to ensure conservation and adopt effective rehabilitation initiatives to ensure mining practices are environmentally sustainable. Moreover, greater investments in exploration, research and development are critical to exploit India’s resource base. A new programme tracking environmental parameters such as air quality, waste characteristics, water quality etc. will be instrumental in monitoring mining activities.
6 Source: http://steel.nic.in/policy.htm 7 Source: Mid-year plan review of Ministry of Steel, GoI
Sustainable Mining – Catalyst for Inclusive Economic Growth | 13 Figure 15: India's Forest Cover
Source: Forest Survey of India
Figure 16: Forest Cover in Indian States
Forest Cover as % of total Geographic area
60% 41% 29% 31% 19% 21% 25% 7% Bihar Karnataka India MP Jharkhand Odisha Chattisgarh Goa
Source: JPM India Metals and Mining, Asia Pacific Equity Research, August 2013
14 | Sustainable Mining – Catalyst for Inclusive Economic Growth 02 Sustainable Mining – Imperative for Socio Economic Balance Sustainable Mining – Imperative 02 for Socio Economic Balance
Over several decades, Mining has been identified as a vital contributor to growth and development in a country. The industry has also made key contributions to employment with nearly 700,000 people employed in India8. However, the outlook towards conducting mining has evolved over time with greater emphasis being laid on the sustainability aspect .The ‘sustainability’ idea was essentially born under the banner of the Global Mining Initiative (GMI) in 1998 that lead to the insertion of the term ‘‘sustainable mining’’ during the World Summit on Sustainable Mining (WSSD) in 2002. Thus, a new facet of Mining emerged, essentially defined as:
“Mining that is financially viable; socially responsible; environmentally, technically and scientifically sound; with a long term view of development; uses mineral resources optimally; and ensures sustainable post-closure land uses. Also one based on creating long term, genuine, mutually beneficial partnerships between government, communities and miners, based on integrity, cooperation and transparency9.”
To ensure overall development and inclusive growth, it has become imperative to adopt sustainable mining practices that encourage community participation and augment rural income and livelihood. The potential sustainability issues in Mining encompass the following aspects:
8 Source: http://www.cci.in/pdf/surveys_reports/mineral-mining-industry.pdf 9 Source: Sustainable Development Framework For Indian Mining Sector, Final Report, November 2011, ERM India Pvt. Ltd
16 | Sustainable Mining – Catalyst for Inclusive Economic Growth • Environmental Sustainability: The most vital concerns in environmental sustainability include usage of energy and water by mining companies and the impact of mining activities on biodiversity, global warming and climate change. Waste management is critical as open pit mining creates major disruptions to the landscape and current techniques of rehabilitating the pits is expensive. It has therefore become imperative to scrutinize the environmental impacts of suppliers’ practices and transportation of materials and worker actions to ensure mining practices are environmentally sustainable.
• Social Sustainability: Worker health and safety is a major concern for the mining industry. Worker and community s a fe t y ; H I V / A I D S r e d u c t i o n s , stakeholder engagement; policies related to life cycles of mining operations and human rights are key focus area. Companies will be required to preserve indigenous culture and heritage as most of the mines are situated in areas with indigenous populations. Additionally stakeholders concerns mining communities need to be redressed immediately .
• Economic Sustainability: Over the years, mining companies have faced several criticisms claiming that they don’t operate in ways that bolster long term economic sustainability. Operating irresponsibly in the social and environmental spheres tend to generate mistrust in these companies which in turn harms investor confidence in these
Sustainable Mining – Catalyst for Inclusive Economic Growth | 17 companies and damages their reputation, therefore exacerbating their investment potential. To ensure economic sustainability, mining companies are challenged to ensure sustainable growth of local communities through institutions and infrastructure that support communities beyond the life cycle of the mine. Identifying areas of particular significance in terms of economic development, outlining policies focused on assessing the contribution of mining companies to communities and ensuring that goods, materials and services are drawn from local communities is critical for economic sustainability. 2.1 Institutional framework under Mining– Centre and State
With several benefits associated with mining in India, focus should be on providing open and transparent data on tax and royalty and how these benefits have been distributed at the local, regional and national levels. The Governments should look at adopting effective mechanisms that maximize transparency, understanding and acceptance of how direct financial flows from mining activities are allocated in ways that are appropriate to their political and legal systems.
2.1.1 Background
India’s mineral development history is as old as civilization with mining activities being traced as far back as 6,000 years. The presence of the ruins of old mine workings are a witness to this fact. A few of these workings have also been the reason for some of the major discoveries of mineral deposits.
However, the major thrust to the mineral development occurred only after 1947 when India gained political independence, when the import ance of mineral development in nation building was recognized. Identifying the significance of the role of mining in growth and development, the Central Government enforced the Industrial Policy Resolution in 1956 under which several industries were aimed to be developed for which increasing quantities of minerals were required.
18 | Sustainable Mining – Catalyst for Inclusive Economic Growth To acknowledge the immense potential of this sector, the Government of India has consciously opened private investments to boost funds and attract technological and managerial expertise. This has increased global interests in the Indian Mining sector and led to opening up of the industry to Foreign Direct Investment after the New Mineral Policy, 1993.
2.1.2 Institutional Framework Today, nearly 80% of The Ministry of Mines undertakes surveys and the mining is done in exploration of all minerals except natural gas, petroleum and atomic minerals; mining and coal and the remaining metallurgy of non ferrous metals like aluminum, 20% is done in various copper, zinc, etc. metals and raw The list of subjects allocated to the Ministry of materials including Mines, Attached Office, Subordinate Office, Public copper, bauxite, iron, Sector Undertakings and Research Institutions under the administrative control of Ministry of Mines are gold, lead, zinc given below:
Figure 17: List of Subject allocated to Ministry of Mining and other Associated Bodies
Legislation for regulation of mines and development of minerals within the territory of India, including mines and minerals underlying the ocean within the territorial waters or the continental shelf, or the exclusive economic zone and other maritime zones of India as may be specified, from time to time by or under any law made by Parliament
Regulation of mines and development of minerals other than coal, lignite and sand for stowing and any other mineral declared. As prescribed substances for the purpose of the Atomic Energy Act, 1962 (33 to 1962) underthe control of the Union as declared by law, including questions concerning regulation and development of minerals
All other metals and minerals not specifically alloted to any other Ministry/Department, such as aluminium, zinc, copper, gold, diamonds, lead and nickel
Planning, development and control of, and assistance to, all industries dealt with by the Ministry
Administration and Management of Geological Survey of India
Administration and Management of Indian Bureau of Mines
Source: Ministry of Mines, GoI
Sustainable Mining – Catalyst for Inclusive Economic Growth | 19 The following are organizations associated with the mining sector.
Organization in Survey and Exploration
• Geological Survey of India (GSI)
This organization of earth science studies, set up in 1851 is the subordinate office of the Ministry of Mines, Govt. of India. GSI provides vital earth science inputs into all aspects of national economic development.
• Mineral Exploration Corporation Limited (MECL)
Established in 1972, the Mineral Exploration Corporation Limited (MECL) is the foremost exploration agency in the country conducting exploration activities. The exploration activities are primarily carried out under promotional programme sponsored by the Government of India on behalf of agencies including the State Government and Public & Private Sectors. Nearly 144681 million tonnes of mineral reserves was added to the National Mineral Inventory till December 201110 .
Organizations in Regulation and Conservation Figure18: Exploration Process
• The Indian Bureau of Mines (IBM) Geological survey and The IBM is a subordinate office attached mineral prospecting to the Ministry of Mines. It is responsible for promoting and conserving minerals, protecting mines
e nv i r o n m e n t a n d s c i e n t i f i c a l l y Petro logical Assessment developing the mineral resource of the & ore Exploration of reserves & country other than coal, petroleum and dressing grade in lease studies hold areas natural gas, atomic mineral and minor minerals.
Detailed exploration by drilling
Source: YES BANK Analysis
10 Source: www.mines.nic.in
20 | Sustainable Mining – Catalyst for Inclusive Economic Growth In addition to the above, there a r e s eve r a l a u t o n o m o u s research institutions associated with the Ministry:
a) National Institute of Rock Mechanics (NIRM), Kolar Gold Fields (Karnataka)
b) National Institute of Miners' Wealth
c) Jawaharlal Nehru Aluminium Research Development and Design Centre (JNARDDC), Nagpur
A very extensive role is played by the State Departments of Geology and Mining in the process of exploration for minerals, regulation and mineral administration
Figure 19: Mineral Administration Process
Mineral administration
Royalty assessment Collection of mineral collection revenue & dead rent
Ensuring systematic & scientific mining, plantation, Stoppage of illegal mining environment conservation and illegal transportation of and welfare schemes for minerals mine laborers.
Grant of mineral concessions
Source: YES BANK Analysis
Sustainable Mining – Catalyst for Inclusive Economic Growth | 21 All the major minerals in India come under the domain of the central government and the minor minerals come under the domain of the State Governments who have formulated mineral concession rules for this rationale. In the federal structure, the State Government owns the minerals in their respective territorial jurisdiction. Whereas the Central Government holds rights in off-shore areas, exclusive economic zones and the continental shelf. 2.2. Policy and Regulatory Environment
Management of mineral resources is the responsibility of both the Central Government and the State Governments in terms of Entry 54 of the Union List (List I) and Entry 23 of the State List (List II) of the Seventh Schedule of the Constitution of India.
The Mines & Minerals (Development and Regulation) (MMDR) Act, 1957 (MMDR Act) is the main legislation laying down the legal framework for the regulation of mines and development of all minerals other than petroleum and natural gas. The Mineral Conservation and Development Rules, 1988 (MCDR) and Mineral Concession Rules, 1960 (MCR) are supplementary legislations, governing the Indian Mining industry (except Coal, Lignite, atomic and minor minerals). Mining and consumption of Coal and Lignite is governed by the Coal Mines (Nationalization) Act, 1973 and subsequent amendments.
MMDR Act was enacted when the Industrial Policy Resolution 1957 was the guiding policy for the sector, and thus was aimed primarily at providing a mineral concession regime to Mining industry which was dominated by public sector undertakings (PSUs).
2.2.1 NMP 1993
After liberalization in 1991, a separate National Mineral Policy was drafted in 1993 (NMP 1993) which encouraged the role of the private sector in exploration and mining. NMP 1993 recognized the need for encouraging private investment including Foreign Direct Investment (FDI), and for attracting state-of-art technology in the mineral sector. The policy stressed that the Central Government, in consultation with the State Governments, shall continue to formulate legal measures for the regulation of mines and the development of mineral resources to ensure basic uniformity in mineral that development of mineral resources was aligned to the national policy goals.
22 | Sustainable Mining – Catalyst for Inclusive Economic Growth To achieve these objectives, MMDR was amended twice in 1994 and 1999 alongwith MCDR and MCR). Introduction to include opening up foreign investment in exploration and mining, of the concept of reconnaissance, as a stage before prospecting, empowerment of State Governments in granting/extending mining leases, making rules to curb illegal mining, etc. However NMP 1993 did not achieve its objectives as share of the private sector did not increase significantly.
2.2.2 NMP 2008
To address the shortcomings of NMP 1993 and provide a fillip to private investment, the Central Government formed a High Level Committee in 2005/06 under Mr Anwarul Hoda (Hoda Committee). The report submitted by the Hoda Committee provided inputs for promulgation of the National Mineral Policy in 2008 (NMP 2008).
National Mineral Policy 2008 enunciated measures like changes in the role of the Central Government and the State Governments to incentivize private sector investment in exploration and mining. It also assured right to next stage of mineral concession, transferability of mineral concessions and transparency in allotment of concessions in order to reduce delays, encourage investment and technology flows in the mining sector in India.
NMP 2008 also sought to ensure mineral availability through augmentation in reserve base, improvement in mining methods, beneficiation and utilization of low-grade ore, rejects and recovery of associated minerals. Lastly, NMP 2008 also sought to develop a Sustainable Development Framework (SDF) for optimum utilization of mineral resources for industrial growth while it sought to protect the interests of the local population in mining areas.
2.2.3 Draft MMDR Bill, 2011 and current state
Since the MMDR Act and its subsequent amendments would not have clearly reflected the objectives of NMP 2008, the Central Government decided to introduce the draft MMDR Bill, 2011 for enactment to replace MMDR Act 1957. However, the Central Government’s inability to push the Bill through during the tenure of the 15th Lok Sabha has resulted in to lapse Bill and with it the proposed reforms it tried to implement. Key features of the lapsed MMDR 2011 Bill included: • Implement a simple and transparent mechanism for grant of PL or ML through competitive bidding
Sustainable Mining – Catalyst for Inclusive Economic Growth | 23 • Provide for sharing of profits and royalty with project affected persons (PAP) / local community through creation of District Mineral Fund (DMF) • Introduce better legislative environment for attracting investment and technology • Set up a National Mining Regulatory Authority (NMRA) with responsibilities including advising the government on aspects of quality standards, mineral conservation strategies, review of existing royalty rates, sustainable mining, etc • Set up National Mining Tribunal and State Mining Tribunal to exercise jurisdiction, powers and authority proposed in the new legislation • Establish National Mineral Fund (NMF) out of the proceeds of the cess levied by the Central Government • Facilitate land acquisition process for mining projects among other things • Encourage sustainable and scientific mining through provision for Sustainable Development Framework (SDF).
The new Union Government would have its task cut out in initiating the entire process of introducing and passing a new MMDR Bill.
2.2.4 Sustainable Development Framework (SDF)
NMP 2008 aimed to balance the needs of economic development through mining as well as needs of protecting the forests, environment, ecology, host and indigenous populations by ensuring all mining is undertaken within the parameters of a comprehensive Sustainable Development Framework. The overall guiding principle shall be that a miner shall leave the mining area in better ecological shape than originally found.
24 | Sustainable Mining – Catalyst for Inclusive Economic Growth For ensuring implementation success, the SDF was designed with a strong base in the existing laws that allow several parts of the framework to be legally enforced, and all of the principles were mandated under the draft MMDR 2011 Bill. 2.3 Governance in Mining
Mining issues in India generated widespread controversies internationally. These issues span across encroachment of forests; underpayment of government royalties; and conflict with tribals regarding land rights. This has also lead to problems such as Naxalism and distortion of Indian democracy by mixed political and mining interests. More recently, the mining industry has been plagued with issues relating to rampant illegal mining, rehabilitation of original inhabitants, adequate land compensation policy and under declaration leading to loss to exchequer.
These increasing concerns on illegal mining in India have therefore made it imperative to ensure the strict enforcement of mining laws. Enforcement has been identified as a key drawback and the biggest point of criticism from all stakeholders. Hence, better enforcement rather than more regulation can help remedy the ills plaguing the mining sector in India. It is also crucial to take a holistic view of the current situation and analyze it in terms of global background to arrive at a Social Equity Model to enable a sustainable environment of development.
2.3.1 Regulating the Indian Mining Industry
The Indian Mining sector has been facing severe criticism with respect to its contribution towards sustainable development. Notably, most of the mining activities are undertaken in the poorest districts and very little benefit has been passed on to the local communities that too at the cost of environmental degradation. Moreover, inadequate policing and legal and regulatory loopholes has helped illegal mining activities flourish in the country
Sustainable Mining – Catalyst for Inclusive Economic Growth | 25 As far as environment conservation is concerned, the process by which activities have been undertaken by the mining sector have been questioned. The intensive use of land has laid significant pressure on the environment which has severely compromised the quality of life local communities. The Mines and Minerals (Regulation and Development) (MMRD) Act of 1957 and the rules framed under it have provisions to ensure environmental integrity in mining operations however more emphasis needs to be laid on their enforcement.
In the light of current governance issues, policy changes in mining towards making policies more sustainable and inclusive are critical. Public policy enabling inclusive sustainable development by sharing the benefits derived from the mineral resource with the community at large will positively affect the growth outlook of the sector.
Globally these debates have led to the drafting of new policies which derive from the policy of community participation and benefit sharing, as well as ensuring that benefits of windfall profits are shared with the society at large by taking into account the economic rent from such activity. An attempt to nationalize private mining companies has proved to be unsuccessful in few countries namely Bolivia11 and South Africa. While there has been
11 Source: Wall Street Journal, April 2011
26 | Sustainable Mining – Catalyst for Inclusive Economic Growth considerable opposition to such suggestions in those countries, the existence of these debates and policies indicate an urgent need to address the issue of greater public participation in the economic benefits of natural resources.
Evidently, there is a need for India to adopt policies that achieve social, economic and environment sustainability to further thrust the growth trajectory of Mining. 2.4 Making Policies Sustainable for Inclusive Development
The ‘Sustainability’ concept in mining is multifaceted, encompassing economic, social and environmental aspects. Mining is critical for employment and revenue generation in many developing nations is bolster economic sustainability. However, its negative impacts on local communities and the environment have ushered the need for adopting mining practices that conserve natural surroundings and promote environment sustainability. Growing evidences have indicated the severity of the imbalance of ecosystems, posing new and challenging risks. The problem of poverty has also been seen as inseparably linked with global ecological problems which cannot be solved unless people have a stake in the outcome and the resources to manage the problems.
Globally countries have been trying to put in place a mechanism to enable an environment of socio economic growth along with development. A mechanism of sharing the benefits which arise from resource is designed by making social commitment in form of royalty charge payable by resource developer. An analysis of some of these policies is undertaken below:
• Sustainable Mining Practices in Ghana: In Ghana, a minerals development fund has been created to ensure a certain portion of government income is transferred to the local communities directly affected by the mining activities. Moreover, companies that apply for mining rights require conforming to a detailed recruitment and training programme.
• Petroleum Fund in Norway: The Petroleum Fund created in Norway allows for three quarters of current revenue to be saved for higher yields with none allotted to particular projects or benefit sharing. This pressurises high-quality and well-governed institutions which are involved in managing natural resources for the greater good.
• Royalty taxes in China: In support of inclusive development, China levies mainly two royalty taxes. One is directly deposited with the national treasury and the second named ‘mineral resource compensation fee’ which is collected by the concerned level of country, provincial or city government12.
12 Source: China, Regulations for the Collection and Administration of the Mineral Resources Compensation Fee, N.150. 1994
Sustainable Mining – Catalyst for Inclusive Economic Growth | 27 • Mining receipt distribution in Indonesia: The distribution of state receipts from natural resources entail 20% to central government and 80% to the region. This 80% is then distributed into two parts - 64% to regencies and 16% to the provincial government.
• Sustainable Mining initiatives in South Africa: In South Africa, mining companies are mandated to accompany their mining rights applications with social, labour and work programmes at the mineral development stage. The success of these programmes is monitored through annual reports in order to ensure goals are met.
Figure 20: Sustainable Development in Mining
t n Building capacity for e Step 4 m effective actions at all levels p lo e v e r d to c le e b s Achieving cooperation among a l Step 3 in ra those with similar interests ta e s in u s m e g h in t rt n o i p Creating organisational policies p Step 2 u and management systems S
Step 1 Understanding sustainable development
Source: International Institute for Environment and Development - www.iied.org
28 | Sustainable Mining – Catalyst for Inclusive Economic Growth Figure 21: Summary of Royalty Practices in Selected Countries
Format China Brazil Botswana Ghana NSW Queensland
Royalty Two Types : Ad Valorem Ad Valorem Ad Valorem Ad Valorem; Ad Valorem or type (NSR) (sales but profit unit based üRoyalty: unit (most non revenue) based based plus constructi royalty in on üMineral the minerals) resources Broken compensati Hill on fee: ad District valorem based
Ad üVarious 0.2-3.0% 3-10% 3-12% 4-7% ad 2.7% of valorem ranges for valorem value, or a rate range each variable mineral, royalty rate if expressed in price exceeds yuan/tonne a reference ore, plus price
ü2: 1-4% depending on mineral
Variation Yes Yes Yes Yes Yes Yes Minerals üRanges of üAluminium üPrecious üPrecious üCoal:5-7%; üMost unit charges ore, stones: stones: industrial metallic for each manganese, 10% 10% minerals minerals: mineral, plus salt, $A 0.35- 2.7% of üPrecious üPrecious phosphorous 0.70/ tone value or a üAd valorem metals: metals: : 3% variable rate for each 5% 5% üOther royalty mineral üIron, fertilizer, minerals: üOther üOther rate coal, and 4% minerals or minerals or remaining üIndustrial mineral mineral minerals: 2% minerals: products: products: (except 3) $A 0.25- 3% 3% üPrecious 1.00/ tone; stones, coal:7% diamond, and noble metals: 0.2%
üGold:1%
Source: “Mining Royalties – A Global Study of their impact on Investors, Government and Civil Society” by James Otto et al
Sustainable Mining – Catalyst for Inclusive Economic Growth | 29 Figure 22: Policy Focus in Mining
Capital Allocation and Access Margin Capital Protection and Projection Productivity Execution Improvement
Infrastructure Resource Access Nationalism Policy Focus
Social Sharing the Licence to Benefits Operate
Price and Skills Currency Shortage Volatility
Source: YES BANK Analysis
In addition to the above sustainable mining practices it is important for policy makers to assess the taxation system under mining:
• The cumulative impact of taxes on future investments in mining need to be taken under consideration. The overall taxation system should be globally competitive and equitable to both the nation and the investors.
• Mining companies can play a major role in influencing Government decisions regarding taxation. Issues including potential overall investment, closure of marginal mines and its implications, changes to the national mineral reserve base and similar issues can be communicated with the Government which could help them take better informed decisions.
• Investor preferences need to be understood and foreign direct investment need to be incentivized to attract capital inflows and differentiate India from other nations.
• Taxation systems should also enable companies to adopt sustainable mining practices at both the community and regional level
Overall, from a macroeconomic perspective, the goals of the government should aim to maximize the net present value of the social benefits from the mining industry in the long run that is not only limited to Government tax receipts.
30 | Sustainable Mining – Catalyst for Inclusive Economic Growth It is important to strike the right balance, if taxation is too high, investment and the tax base will diminish as investors would move to more profitable alternatives, and if the taxation level is too low, the nation will lose out on serving public welfare.
Similarly, it has also become imperative for the Indian mining industry to ensure long-term economic sustainability. Local ‘Community Involvement’ has been identified critical for ‘Inclusive Growth’ as it encourages economic independence and enhances standards of living. Infrastructure and institutions also need to be augmented to ensure that communities are economically sustainable. This should go beyond the life-cycle of mining operations. Moreover, all payments should be encouraged to be reflected transparently and payments released to the society should be based on needs of stakeholders.
Environment conservation and land rehabilitation have also emerged as major areas of concern. Environment and resource degradation, and extraction activities have disrupted the natural environment, contaminating waterways and overall affecting biodiversity negatively. Occupational health hazards are other aspects that need attention.
Figure 23: Towards Sustainable Mining-Community Involvement
Source: http://www.miningandtheenvironment.com/res_artwork.aspx
The vitality of Skill development is crucial to understand. An important mechanism to overcome the impending challenges is improving the operational performance of mining companies through asset management, asset utilization and optimization, shared services approach and managing costs.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 31 Key production costs for mining companies comprise of stores and consumables; repairs and maintenance; power costs; manpower and mine development. Stores and consumables, repairs and maintenance, power and manpower costs contribute 90-95% of mining companies’ production costs. The mining companies need to focus on the following areas to optimize costs: • Overall equipment effectiveness improvement • Energy efficiency • Manpower efficiency • Logistics costs • Working capital management
Besides undertaking productivity enhancement measures, the Indian Mining Industry clearly needs to focus on developing qualified mining professionals and a skilled resource base. India must take multiple steps to bridge the impending shortage of human capital in mining, especially for mining engineers, diploma holders and skilled/semi-skilled labor.
Some other areas of focus include:
• Encouraging Private Sector Participation: In 1993, the National Mineral Policy did not focus on creating equal opportunities for private sector participation. Public sector companies were always given priority in the allocation of licenses.
• Introducing Government Concessions: The Policy did not provide for any tax concessions for exploration expenditure or motivate companies to raise funds for exploration.
• Delineating Laws: Several overlaps in the relative roles of the states and the centre are observed.
• Simplifying Complex Procedures: The procedures involved in clearing mining leases are usually quite complex and time consuming. They involve approvals from both the state and central levels including clearances as per the MMDR Act, MCR, MCDR and the Forests (Conservation) Act, Environment (Protection) Act.
• Ensuring Tenure Security: No fixed tenure exists between the Prospecting licenses and Reconnaissance permits stage. The preferential right for conversion from one for to the other did not assure an exclusive right to mine any deposit found within the area covered under the Reconnaissance permit or the Prospecting license.
32 | Sustainable Mining – Catalyst for Inclusive Economic Growth • Adhering to Time Limits: No fixed time limits exist for grants of permissions. The usual time taken between applications and approvals range from six months to three or more years.
Hence, a new integrated system of governance could fuel the sustainable development of the industry. New guidelines and voluntary codes are critical to ensure responsible mining practices in regions where the Government of India is unable to regulate mining activities.
The premise is that there is a need to develop a model of development which maintains a balance between social, economic and environmental factors in order to achieve sustainable development in the mining sector.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 33
03 Sustainable Practices in Mining – Case Studies Sustainable Practices in 03 Mining – Case Studies A. Tourism as Model of Sustainable Development - ‘Mining Tourism Route’, Chile13
Coming 2015 Chile is expected to capture on the world tourist population with launch of ‘Mining Tourism Route’. Aimed at bringing the world closer to mining through tourism, the initiative is looking to build a s u s t a i n a b l e m o d e l o f development and economic
growth. The Chuquicamata mine in northern Chile is the world's largest surface mine and one of the main attractions on the The mines which are Mining Tourist Route, which will be launched in 2015. expected to open are Chuquicamata – the largest surface mine in the world that’s in the Antofagasta region – 1,585 kilometers north of the nation’s capital of Santiago along with 23 other mines in the region. Chile has abundance of both surface and underground mines in Antofagasta, which extract various resources like sulfur and saltpeter, gold,
13 Source: Corporación Nacional del Cobre, Chile
36 | Sustainable Mining – Catalyst for Inclusive Economic Growth lithium. All these would form part of the Mining Tourist Route which is expected to open in 2015. There are in total 19 large mining, 20 medium-sized, 540 small mines and 100 micro- mines developments in the Antofagasta region.
An initial public-private investment of $33 million Chilean pesos (about US$58,000), provided by the National Fund for Regional Development (FNDR) and mining companies, was allocated for the Mining Route last year.
During the Mining tour, visitors would be exposed to various mining activities and processes which would help them develop more informed knowledge about mining activities and its impact. This would enable corporate to demonstrate the work they are undertaking to people in general. Along with promoting Mining tourism in the region the tourists would be encouraged to visit the Los Flamencos National Reserve or a vineyard in the district of Toconao in the San Pedro de Atacama, about 340 kilometers from Antofagasta. Route, created by the Antofagasta Regional Branch of the National Tourism Service (Sernatur) in collaboration with mining companies and the Regional Ministerial Secretariat for Mining. B. Building a Tourism Eco System for development - PT Newmont Minahasa Raya (PTNMR), Indonesia14
The lifecycle of a mine can span decades and even generations.
PT Newmont Minahasa Raya’s (PTNMR) support to Tourism at Lakban Beach in Indonesia is one example of creating a PT Newmont Minahasa Raya Supports Tourism at Lakban Beach in Indonesia sustainable environment involving local communities beginning with exploration and continuing well after the mine closure.
In 1996, PTNMR began gold mining production at the Mesel Gold Mine in North Sulawesi. By the year 2004 all mining and processing activity at Mesel had ended; most closure activities were finished in 2006; and closure monitoring was completed in 2010. Even post completion, PTNMR continued to fulfill a number of obligations under the Contract of Work (CoW) with the Government of Indonesia.
14 Source: http://www.newmont.com/our-voice/post/study-sustainable-development-after-mine-closure
Sustainable Mining – Catalyst for Inclusive Economic Growth | 37 Tourism Model: Reef Restoration
Tourism as a tool for sustained development was the key activity area undertaken by PTNMR. Reefballs were donated by PT Newmont Minahasa Raya in Buyat Bay to stimulate reef growth and support diving tourism. PTNMR also e n a b l e d a n d f u n d e d t h e construction of the largest artificial coral reef program undertaken by a Reefballs donated by PT Newmont Minahasa Raya in Buyat Bay private company, which included stimulate reef growth and support diving tourism more than 3,000 reef balls to be deployed in Buyat Bay and Totok Bay. Support was received from the Tourism Office of South Minahasa in order to undertake mapping of existing coral reefs in both bays more than a decade ago. This enabled in increasing fish stock in the region, reducing reef loss, which enabled in developing and sustaining livelihoods of local fishermen. These activities helped over the years in creating an environment where underwater tourism in the region was highlighted and promoted.
Agro forestry activities: PTNMR promoted agro forestry related activities by ensuring that the reclaimed land was redeveloped as a forest area. For this purpose the company delivered nearly 450 hectares of reclaimed mine area to the Government of Indonesia. This area is now a secondary forest which provides high-value species such as mahogany, teak, nyatoh and sengon to the economy of the region. This reclamation exercise has ensured long-term sustainable economic benefit for the region and has ensured maintenance of ecological balance in the region.
Other Initiatives: To help reduce the fishermen’s costs and improve efficiencies and product quality, PTNMR built a much-needed cold-storage and ice block factory in the location formerly used as the mine’s port.
Measuring Success
PTNMR’s work with Buyat, Ratatotok and the surrounding communities is an example of sustainable practice in mining which has enabled economic and social development of the region from a long term perspective. Through this type of collaborative approach to development, the company aims long-term economic, environmental and social sustainability for our local communities.
38 | Sustainable Mining – Catalyst for Inclusive Economic Growth C. Reclamation of Mined out land - Sesa Goa’s Sanquelim mine, India15
Eco Tourism Spot: 106 hectares converted into a model reclaimed mine.
One of the important activities for sustainability involves reclamation and rehabilitation of mined out and degraded land
A project in this direction has been undertaken by Sesa Goa for rehabilitation of mined out or degraded land, in their Sanquelime mines (106 out of 203 hectares) in Mauliguem Village of Bicholin taluka in North Goa. The mining operations were started in 1960 by Sesa Goa and with the exhaustion of resource the mine got closed in 1988. At present no mining activity is in operation in this area. This site has been completely reclaimed by now
Eco Tourism Spot: The sustainable practices for converting the region into an Ecotourism spot has set a benchmark for other mining companies all over the country to follow. All the best practices in reclamation, agri-horticultural approach, water body development, pisciculture and development of medicinal plants garden, have been adopted. Exhausted mining pit has been converted to a pond for Nakshatra Devata Udyan is based on the 27 pisciculture and horticulture species Constellations (Nakshatras). of the Goan region (cashew, mango, coconut, jackfruit etc.) have been grown on waste dumps along with spice plantations and medicinal plants.
15 Source: Sustainable Development Report by Institute for Studies in Industrial Development
Sustainable Mining – Catalyst for Inclusive Economic Growth | 39 These are irrigated by rainwater harvested in the mining pits. Athletic facilities like playgrounds, football academies and even a technical/industrial training schools have been established on the reclaimed land.
Social Development Work: Apart from developing the mined out land, the company is using the developed mine infrastructure for various social development works after the closure of mine. The foundation has established the Sesa Technical School and two football academies on the reclaimed mined-out area in Sanquelin. The students passing out of the technical school are specialist in the field of machinists, instrumentation, electricians and instrument mechanic, and are finding placements in large corporate both Indian and multi- national. D. Community Engagement: Xstrata Coal, New South Wales, Australia
Engagement with communities is an ongoing and long-term process, w h i ch n e e d s t o t a ke p l a c e throughout the life of a mining project. Xstrata Coal, a mining company has put in place a vineyard monitoring program for its Bulga Coal mine region. The coal mine location is in the Hunter Valley, New South Wales, known to be one of Australia’s best-known wine Xstrata Coal environment & Community manager with Wines grower producing regions. In the mid-1990s, Xstrata applied for coal exploration licenses to investigate an area beneath 40 commercial vineyards and near a significant local watercourse.
Early on in the mining project the company ensured that communication with local people was established to allay any fear and concern. Mining under operational vineyards was a first for Australia, and local residents expressed concerns about the potential impact on local viticulture and water resources.
Xstrata used collaborative approach and formed a specific project team and a Trial being done above the former South Bulga Colliery community consultation committee. Taking
40 | Sustainable Mining – Catalyst for Inclusive Economic Growth inputs from the community, academics and consultants, Xstrata using the demonstrative approach constructed a simulated vineyard over the existing South Bulga underground mine, to assess the impacts of subsidence on the vineyard infrastructure. It kept stakeholders regularly updated on the progress of viticulture trials. Xstrata then established a comprehensive consultation program for the ongoing management of the mine.
Grapes used in Hunter Valley wines are growing above Glencore Xstrata’s Beltana No 1 mine, which is one of Australia’s most productive underground coal mines. Glencore Xstrata has been mining successfully under about 90 ha of vineyards since 2005. Seven vintages have been produced since mining began, with little or no impact on the quality of grapes produced, and the vineyards produce up to 250 000 bottles of wine a year. E. Preserving cultural heritage: Lihir Mines, Papua New Guinea16
The importance of preserving culture and heritage has gained momentum in the recent past with focus towards retaining the old art and form of the same. This has been viewed as common thread which binds the community together.
Since the early days of the mining operation, social impact assessment studies in the region had expressed concerns by community leaders about the need to strengthen and preserve Lihirian culture.
Located on the largest island of Lihir Group of Islands in Papua New Guinea, the Lihir gold mine commenced operation in 1995. The operations were owned by Lihir Management Company (LMC), a wholly owned subsidiary of Rio Tinto. Later in 2005 Lihir Gold Limited (LGL) assumed ownership and management of the same and which was later merged into Newcrest Mining Limited. An elderly of the tribe standing beside Kabelbel Canoe on day of Launch of Lihir Cultural Heritage plan Efforts have been made by the mining company in the region to preserve and promote cultural heritage by undertaking local cultural programs, which included the establishment of a cultural awareness office within the company’s community relations department. Lihir Gold limited supported Lihirian cultural heritage plan (2008), an initiative of group of committed Lihirians, together with a support
16 Source: Department of Resources, Energy and Tourism & Austrade
Sustainable Mining – Catalyst for Inclusive Economic Growth | 41 team comprising an anthropologist, an historian, an ethnomusicologist and a heritage specialist. The group held meetings and workshops with locals to develop the plan. This plan was also given the Lihirian title: A irir wana mamalien a anio Lir, which means ‘A plan for social stability and harmony on Lihir’ (see Bainton et al 2011).
The company undertook documentation of major sacred sites and cultural practices and organised various cultural festivals. A Lihir-wide representative cultural heritage committee was established to undertake these activities. In mid-2009, an island-wide workshop was held to enable the committee to develop a draft cultural heritage management plan (CHMP) aligned to internationally recognised heritage standards. CHMP created the association which has since completed a number of projects in the area of cultural heritage leading to harmony and development at the same time. F. Setting sustainability benchmark - Juruti Mining Project, Brazil
The bauxite mining project undertaken by Aloca in the Juruti region of Brazil has been receiving accolades for setting new standard and benchmark for sustainable development affecting positively the social and economic conditions in the local community and enhancing environmental conditions.
The region is inhabited by 47,000 people, with 65% of them living in around 150 rural communities. The Juruti Mines at Brazil – Setting newer standards in mining economy has traditionally been dependent on fishing, cattle-raising, Brazil nut extraction, and subsistence agriculture.
The project was started in 2009, involved in extraction of bauxite being evacuated by port along the Amazon River, and a rail port connectivity of 55-kilometer for transportation of bauxite from the mine to the port.
Alcoa launched its sustainable program for the region under the program known as the “Sustainable Juruti Program”. The program is a proposed model for mining and local development in the Amazon, and is primarily based on three sustainability principles: respect for the environment, social responsibility, and economic success. The concurrent implementation of (i) a Council, (ii) Development Metrics, and (iii) a Development Fund is
42 | Sustainable Mining – Catalyst for Inclusive Economic Growth unique to Alcoa and to the Amazon region, although the concept is now being applied to some of the other mega-projects in this region, notably being hydro projects along the Madeira River.
Alcoa's approach to educate residents about the project and solicits their input was the key in changing opinion in favor and providing the organization with right inputs. To further this principle Alcoa conducted two opinion surveys, held three public meetings attended by almost 8,000 people and almost 70 additional meetings with community members, and implemented a far-reaching communications program. Alcoa also conducted extensive surveys, studies, and field research. The Sustainable Juruti Council (CONJUS), was established in 2008, to serve as the key channel for dialogue between civil society, the company and the public authorities and brings together three representatives from the private sector, three representatives of Government institutions, and nine representatives from civil society. This form of council served as a basis of collaborative dialogue and helped the company build on the needs of the community.
In 2010, a public opinion poll conducted by IBOPE indicated that 91% of the population in the municipality viewed the installation of Alcoa’s new bauxite mine as a positive way.
Alcoa’s approach to the Juruti project motivated Conservation International to say, “Alcoa is raising the bar quite high and is creating hopefully a new model of how mining projects can be established in Amazonia without creating new waves of deforestation in the region.” Exame business magazine in November, 2010, recognized Alcoa, as Brazil’s Most Sustainable Company, primarily for its initiatives related to the Juruti Bauxite Mine. G. Water Management - Argyle Diamond mine, Rio Tinto, Australia Figure 24: Lake Argyle Water Consumption
Rio Tinto developed had in 2003 set 4000000 an internal water standard for 3500000 setting out minimum expectations 3000000 for water management to be Water consumption (kiloliters) 2500000 u n d e r t a ke n a t e a ch o f i t s operations. Rio Tinto has used a 2000000 “catchment approach” to water 1500000 management, which encompasses 1000000 all water resources in the region 500000 surrounding the area of operation. 0 2005 2006 2007 2008 2009 2010 2011 Argyle Diamond Mine is the world’s l a r g e s t s i n g l e p r o d u c e r o f Source: International Council on Mining and Minerals Report on Water Management in mining dated May 2012
Sustainable Mining – Catalyst for Inclusive Economic Growth | 43 diamonds, producing approximately 30 million carats each year – one-fifth of the world’s natural diamond production
The mine had a consumption of more than 3,500 megalitres from Lake Argyle to run its operations in 2005. The target was set to reduce the use to zero over period of time. The processing plant at the site was the biggest user of water, where water is used to wash and separate the diamonds. Earlier water from the process was being discharged into the environment, however since then the water is now been captured and recycled back through the processing plant, achieving a recovery rate of 40% in recycling. Water seepage from tailings is also captured and recycled for use in the process. Dewatering of the underground mine and from the surface pit operation provides additional water that is collected and stored in the two dams for drinking and operational use.
By introducing these changes to water usage in the mine, Argyle has achieved a 95% drop in water taken from Lake Argyle since 2005, and by 2009 the use of water from the lake was reduced to 300 megalitres.
44 | Sustainable Mining – Catalyst for Inclusive Economic Growth 04 Mining Industry - Key Challenges Mining Industry- 04 Key Challenges
• Regulatory factors:
Mining in India suffers from lack of co-ordination between different Center and State Governments. Among various solutions proposed is the formation of a single-window system with participation of all Ministries / Agencies to get things moving and boost investor confidence.
The industry is also characterized by lack of transparency in decision-making resulting in delays in approvals, extensions, clearances, etc. Common examples affecting the Mining industry include uncertainty in getting the next
46 | Sustainable Mining – Catalyst for Inclusive Economic Growth stage of mining concession (RP to PL or PL to ML) or extension of mining concession in a time-bound manner. Similarly, lack of transparency and flawed process in allotment of mining blocks opened the full Coal mining sector to an unprecedented judiciary overhaul and cancellation of multiple coal blocks previously allotted by the Government. These developments completely affected these Mining projects and associated downstream projects in the core industries (e.g. Power, Cement, Steel, etc).
• Negligence in enforcement of laws
Inspite of having robust legal framework, absence of a strong body to oversee meant large- scale illegal mining causing environmental imbalance forcing the Supreme Court to clamp down mining completely in Karnataka and Goa. Lackadaisical approach in law enforcement induced decision-making paralysis in parts/regions of the government machinery. It is important to put in place a time-bound place, a time-bound plan to penalize errant miners, monitor mining closely.
• Community involvement and land acquisition
The industry has earned a bad reputation for sharing gains of Mining inadequately with the local community and PAPs leading to difficulties in land acquisition. Unclear terms and procedures for rehabilitation of PAPs, also pose a hindrance in getting clearances for acquisition of land for mining projects. Further, land acquisition has been bottleneck instances involving Forest Land (under purview of MoEF) due to inconsistent application of Forest Laws.
• Environment and Sustainability
Mining has resulted in environment violations viz., encroachment of forest land, disappearance of flora, fauna and green-belts, violation of the annual permissible mining quantity, etc.
The industry needs to rectify and address the environment and sustainablity issue by adopting a balanced approach to Mining while also protecting the needs of forests, environment, and ecology. Implementation of the SDF, first proposed in NMP 2008 and subsequently provided for in the now lapsed Draft MMDR 2011 Bill, would help the industry significantly in striking ecological balance.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 47 • Under-developed evacuation infrastructure
Majority of India’s mineral deposits are located in Eastern and Central India. Construction of railways and roads connecting these regions to consumption centers or augmentation of Port infrastructure has been stuck for years because of insufficient investments, delays in approvals and domestic insurgencies, etc. The Government needs to invest in evacuation infrastructure to ensure optimum utilization of its mineral wealth and reduce dependence on non-critical imports.
• Insufficient Geological and Exploration Expenditure
India has lot of Mineral Resources, but accounts for only 0.5%17 of the global exploration spend (compared to 19% and 12% by Canada and Australia respectively). Also, exploration spend per square km in India is one of the lowest among the major mining economies and exploration is mostly restricted to a depth of 50 to 100 metre vs. as deep as 300 metre in countries such as Australia, South Africa and Canada. This has acted as a deterrent for potential investors/ mining companies seen by way of absence of large-scale involvement of Junior Exploration companies. Resultantly, little of India’s vast mineral resources have been converted into mineral reserves.
To encourage Geological and Exploration spend, some of the best practices seen in exploration focused countries like Australia, Canada need to be studied and implemented in India (e.g. Flow through Shares as a financing tool for Exploration, Mining rights seen as property rights and hence easily transferable, etc).
17 Source - Metals Economic Group website and 'Mining India: Sustainability for Growth, Ernst & Young'
48 | Sustainable Mining – Catalyst for Inclusive Economic Growth A flow-through share (FTS) is a share, or the right to buy a share, of the stock of a mineral resource company where tax deductions "flow through" from the company to the investor. A flow-through share is issued under a written agreement between a corporation and an individual. Under the agreement, the individual agrees to pay for the shares, and the corporation agrees to transfer certain mining expenditures to the individual. Flow-through shares were originally introduced to address an exploration financing inequity which arose between major and junior exploration companies. Flow-through share investors can deduct their investments from otherwise taxable income. Due to this feature – FTS have helped funding exploration activities in Canada
• Shortage of Technology and Human Capital
The mining sector in India hasn’t reinvented itself in terms of technology. Availability and use of high technology equipment is still below potential. According to a study, Coal India, the largest Coal miner in the world produces 1,100 tonnes of Coal per employee annually. The same metric is 36,700 tonnes for US’s Peabody Energy and 12,700 tonnes for China’s Shenhua Energy18. Inadequacy of investments in R&D has been a key reason for the technology gap. Adoption of world class technology, equipment with latest emission norms will result in numerous benefits like increased productivity, higher safety standards and sustainable mining practices.
India lacks skilled human capital in mining as demand for engineers, diploma holders and skilled/semi-skilled labour is expected to create shortfall equivalent to half the supply by Year 2025. To prevent this, significant investment in enhancing the human capital pool would be required.
18 Source: PWC Report (2013)
Sustainable Mining – Catalyst for Inclusive Economic Growth | 49 • Insufficient Foreign investment in Mining
The industry has been unable to benefit from foreign investment allowed under the 100% FDI automatic route. Part of the problem lies in the difficulties / failures encountered by early foreign entrants (viz., Posco, Vale, Arcelor Mittal, etc) which sought to invest in the Exploitation stage of the Mining value chain.
To win back the confidence of foreign investors, the domestic industry needs to communicate the investment attractiveness of all components of the value chain (including Geo-surveys, Exploration, Mining services, End-use processing) which can benefit from foreign technology, skills and expertise through JVs, technology transfer, etc.
• Funding issues
The mining industry is capex intensive with high lead times. Resulting in high interest costs. Further, regulatory hurdles hurt prospects of mining companies & this reflects in fall in bank borrowings. There is thus need for financial support from banks/financial institutions/ government agencies which would offer soft loans to mining companies, manufacturers of mining equipment, contractors etc. Also, raising funds for exploration activities in India is difficult as there are very few options available to raise requisite funds for risky ventures.
50 | Sustainable Mining – Catalyst for Inclusive Economic Growth 05 Social Equity Model of Development– Sustainable growth in Mining Social Equity Model of Development– 05 Sustainable growth in Mining
The long term model of sustainable development encompasses measures and platform to build a cohesive and synergetic structure bringing together various stakeholders in the value chain.
The Social Equity Model follows an integrated approach to development involving the private developer, community, NGO's, Governmental organizations, Financier and Knowledge Bank in formation of SPVs during exploration or mining processes. The model is based on a cooperative approach to development. Such partnerships provide a platform for fruitful collaborative partnerships, and also create a strong knowledge base that pushes sustained development and ensures social equity in the growth strategies. Partnerships involving Govt./Pvt Sector/ NGOs can assist in giving a larger/ global perspective to local problems
This social equity approach aims to holistically include the local community as a partner, and is an enabler of development linkages with the rural and semiurban communities. With inclusive development as an objective the model takes into account the objectives of all the stakeholders involved in the project.
Under this model, a special purpose vehicle is formed with equity from a promoter, private investors and social equity from the local community in the form of land allocation and local support. Government agencies and NGOs provide the necessary support with respect to fiscal concessions and
52 | Sustainable Mining – Catalyst for Inclusive Economic Growth facilitating the formation of synergetic partnerships between the local communities and promoters of the project. The management of the project is by the promoter and the involvement of local community also ensures sustainability of the project due to creation of employment and added revenue for the community. This is a self sustaining cooperative model of development where the local community involvement leads to the creation of social equity.
The figure below gives the synergetic and transactional relationships between various stakeholders in the process.
Figure 25: The Social Equity Model
• Facilitators • Knowledge Based Partnership • Synergetic Partnerships • Sustainable Practices NGO(s) • Environmental protection • Preserving heritage and culture • Advisory Entrepreneur / • Knowledge Company Partnership
• Return on Capital • Contribute Resources in form • Risk Capital • Profit or Land and Labor • Private Sector Efficiency • Structured Participation in • Support and inputs • Employment management (cooperatives / • Livelihood • Responsible Development producer • Sustainable practices • Collaborative approach • Preserving heritage and culture • Sustainable best practice
• Policy Regulations • Govt Facilitation Debt / Equity • Structuring, Social Equity based • Fiscal Concessions / Social Interest/Profit Financiers / inclusive devt. Equity investment. Investors • Advisory Government/Inter government • PPP implementation organization • Sustainable Model Financing • Showcase / replication of • Responsible Lending practice • Policy Research Established model. • Good Governance practices • Platform for future knowledge • Platform for Voice initiatives • Social Equity approach • Knowledge based inputs • Cooperative model of Knowledge Bank Development • Institutional Mechanism
Source: YES BANK Analysis
Sustainable Mining – Catalyst for Inclusive Economic Growth | 53 Eco System Approach
The model follows an eco system approach where sustainability of the entire eco system is built upon smaller ecosystems which contribute to the synergetic alignment of the entire chain. Various sub ecosystems and their inter linkages are explained below 1. Knowledge Bank – Private Player – Mining SPV
The private player brings risk capital for developing resources which along with efficiency in operation is expected to provide adequate return on capital in terms of profitability and positive payback from investments. The Knowledge Bank provides the private players, knowledge advisory in terms of various sustainable development practices and good governance practices which promote and facilitate responsible mining operations being carried out for various stakeholders in the Eco system. 2. Knowledge Bank – Government – Mining SPV
The Government forms policies and regulations within which mining companies operate. These policies form the broad framework of operation and adherence to the same is required to carry out mining activities by the SPV. The Knowledge Bank through its policy focused research provides inputs with regards to various sustainable best practice and good governance which can be adopted at the policy level to bring about a change in the current mining activities enabling a comprehensive socio economic development. 3. Knowledge Bank – NGO- Community – Mining SPV
The Knowledge Bank using its Social equity approach for development brings Communities and NGOs within the Value chain of development thereby ensuring the sustenance of eco systems. The knowledge bank through its cooperative model of development provides inputs to NGOs and Communities too. Building on this collaborative community model of development, the community provides inputs to the Mining SPV in terms of land and labor in return for structured participation in management and adoption of sustainable development practices for preservation of heritage and culture.
Collaborative Community Structures: How They Help Foster Inclusive Growth
Developmental Partnerships
• Multi Stakeholder response to local challenges as an effective tool for sustainability.
• Capacity Building and cooperative structures 'enable' communities to manage and solve their issues themselves
54 | Sustainable Mining – Catalyst for Inclusive Economic Growth • Such partnerships provide a platform for fruitful collaborative partnerships, and also create a strong knowledge base that pushes skill development and ensures social equity in the growth strategies. Partnerships with Govt./Pvt Sector/ NGOs assist in giving a larger/ global perspective to local problems
• Policy Framework: Institutional innovation to consolidate structures that guide communities and entrepreneurs
Stakeholder Alignment
• Facilitates an equal voice for all stakeholders, thereby observing their interests and making mining activities sustainable in the long run.
• ‘Real’ Ownership: Align aspirations and foster ownership/responsibility for common purpose/goals
• Provide platforms, skills and opportunities for communication
Sustainable Mining – Catalyst for Inclusive Economic Growth | 55
06 Way Forward 06 Way Forward
Sustainability has always been at the forefront of the Mining Industry. It has major implications on overall development of rural communities including upliftment through involvement in mining activities. Maintaining this socio- economic balance has therefore attained a monumental position for equitable growth of an economy. The three sustainability facets shaping sustainable mining practices include – Environment, Social and Economic aspects (the triple bottom line). The following points highlight areas critical to thrust the industry an its growth trajectory.
Mining impacts the environment as well as the socio-economic set-up. Therefore, minimizing the adverse impacts and optimizing the benefits from mining to the community becomes critical for creation of Sustainable Development Framework (SDF)
58 | Sustainable Mining – Catalyst for Inclusive Economic Growth Figure 26: Sustainable Development Facets
Source: YES BANK Analysis
• Adopting an integrated approach for development in Mining– ‘The Social Equity Model’
The Indian mining industry has been characterized by a moderately cohesive and synergetic structure that lacks the required environment. This is where the Social Equity Model becomes vital for long term sustainability. The cooperative approach towards development could encourage social equity in growth strategies promote strategic collaborations with infrastructure players and investors.
• Enhancing Policy/Regulatory framework
Given the untapped potential of mining in the country, current mining policies must be aligned to attract foreign investments and operations. It has been observed, that State governments are usually inclined to reserve potential areas to Public Sector Units in grants of mineral concessions19. These reservations prevent private sector from entering these areas and conducting exploration activities. It is critical that policies focus on promoting private sector involvement and Improving rail and port services through modes of Public Private Partnerships (PPPs).
19 Source: Development of the Indian Mining Industry–Way Forward, FICCI Mines and Minerals Division. October 2013
Sustainable Mining – Catalyst for Inclusive Economic Growth | 59 • Boost Mineral exploration and efficiency of Mining activities
With an estimation of 5.71 lakh square kilometers20 of Obvious Geological Potential area in India, the government must focus on allocating funds towards exploration and development activities. Despite this immense potential India spends only a fraction of its GDP on exploration and does not exploit its innate potential. This is clearly indicative of the insufficient implementation of GSI recommendations and lack of policies supporting mandatory exploration for mines and incentivizing green field exploration. Attracting global investments in exploration could provide the required impetus as current players lack the required technology, skill set, efficiency and operational agility to exploit mineral exploration to its maximum.
• Incentivize investments in Mining and rationalization of Taxes
The Indian Mining sector is undoubtedly one on the highest taxed sectors in the world with its effective tax nearing 45% vis-a-vis other countries like Australia (39%), Canada (35%), China (32%) and Russia (35%)21. The current tax policies extort value rather than attract investments in the mining sector. As per the current draft, the MMDR Bill 2011 levies additional taxes and duties leading to the effective tax nearing 60%. Which would further burden the sector and inhibit its growth. There is hence a pressing need for policy makers to adopt tax reforms and introduce incentives/concessions that India a competitive position in the global mining space.
20 Source: http://mines.nic.in/writereaddata%5CContentlinks%5C3e370e6d5bf34a11b7badb248ed812e3.pdf 21 Source: http://www.ficci.com/spdocument/20317/Mining-Industry.pdf
60 | Sustainable Mining – Catalyst for Inclusive Economic Growth • Encourage transparency and regulatory certainty
Despite having 100% FDI, the mining industry is yet to receive significant capital inflows from foreign players. Even in terms of investment environment, India is ranked low under the ‘attractiveness of Government mining policies’ criterion. Clearly, policy makers need to focus on providing an enabling environment that encourages transparency. To encourage potential investors additionally, there is a need to clearly define regulations around new concessions and mining operations. Although the rising demand for metals globally tends to drive investor interests, the uncertainty aspect draws them away from investing. Therefore it is critical for the Government to realize the importance of regulation certainty to investments in the sector.
• Single Window/Provisions for speedy clearances
Currently, mineral policies of each state in India diverge from each other and vary in terms of grants of mineral concessions. The provisions under the Forest (Conservation) Act 1980 need to be reviewed to encourage detailed prospecting and exploration for mineral investigation, Further prospecting activities should be excused from forest clearances as long as no degradation is being caused by the activity. Single window clearances should also be introduced to expedite approval processes and increase efficiency through reduced costs and time involved.
• Benefits sharing can trigger inclusive growth
A very critical aspect of s u s t a i n a b l e m i n i n g encompasses the need to share mining benefits with the community. For long term sustainability, there is an u r g i n g n e e d f o r t h e government to propose an economic model that aligns stakeholders’ expectations with sustainable profit sharing ratios. Sharing profits with the local communities tends to facilitate benefits to trickle down to the grassroot level. Mining companies should also be responsible for augmenting infrastructure and basic amenities in these regions.
Sustainable Mining – Catalyst for Inclusive Economic Growth | 61
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The Federation of Indian Mineral Industries (FIMI), which came into existence with a small membership of about 40 federating associations and individual units, is now a 350-member body. FIMI envelopes in its fold mining, mineral processing, metal making, cement and other mineral-derived industries as well as granite, stone, marble and slate industries — private, joint and public sectors — of the country. It represents the entire non-fuel mining and mineral processing activities of the nation. FIMI's main objective is to establish a vibrant, environmentally benign mineral industry (explorative, extractive and processing activities related to minerals) that meets the mineral needs of the nation from the existing resource endowment, import the mineral and metals that are scarce or absent, and export the surplus minerals and metals that have an external market without prejudice to domestic needs. FIMI is persuading official implementing agencies to bring out the necessary changes in procedures to avoid delays in order to harmonize the policy and practice in the mining industry. NOTES