Boston, MA -- (SBWIRE) -- 07/18/2012 -- India hosts a wide range of globally significant mineral resources, including: four fuel minerals (such as coal and uranium); 11 metallic minerals (such as iron); 22 minor minerals; and 52 non-metallic minerals (such as clay). The country ranks among the world's top five nations for its core competency commodity reserves of coal and iron ore. Iron ore reserves are estimated in the region of 23bnt (bn tonnes) and account for 6% of global reserves, while coal reserves are reported to be around 255bnt. India is the world's third-largest producer of coal, fourth-largest producer of iron ore and the fifth-largest producer of bauxite. However, only 10% of the country's landmass has been explored due primarily to significant regulation and bureaucratic obstacles.
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India's mining industry is set to reach US$36.5bn by 2016, as output growth of key minerals remain strong. However, growth in 2012 and beyond will continue to be curtailed by India's poor operating environment. A bright spot, however, is the increasing number of Indian companies venturing overseas to secure stable, long-term supplies of minerals such as coal and iron ore in a bid to meet fast-rising domestic demand.
India's regulatory environment is prohibitive for investors although recently proposed legislation is a step in the right direction. In the past, mining permits/licences are issued contingent on success in the reconnaissance phase. This practice exposes firms to high levels of risk. However, the proposed 2011 mines and minerals development and regulation (MMDR) bill allows for the granting of non-exclusive reconnaissance licences and high-tech reconnaissance/exploration licences based on ability and intention to develop an area.
The new bill also calls for a system for bidding licences, which can create a market for them, increasing transparency. The current system of 'first come first serve' in distributing natural resources for development is fraught with potential conflicts of interest and can be easily abused by officials. As of April 2012, the Indian government has decided to still distribute natural resource assets through this manner despite a Supreme Court ruling saying that all national resources must be distributed only through auction. This comes as the country awaits the still-pending decision on the 2011 MMDR bill.
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