High value product mining needs impetus, it’s part of calibrated plan of import substitution: Minister
By pursuing a robust import substitution strategy, which is based on the boilerplate of swadeshi, the government has made a huge turnaround in the domestic consumption patterns of coal, urea and electrification of railways (replacing diesel). This is a part of the premeditated plan, which is being taken to the next level of competence by mining for high value products. On the front burner are gold, bauxite and diamonds. Power and coal minister Piyush Goyal talking to Financial Chronicle said, “High value product mining has to be given the necessary impetus. It is a part of a calibrated plan of import substitution. Gold import meaningfully impacts India’s current account deficit adversely and our endeavour is to replace it with domestic gold mining of some size and scale. We have written to the government of Karnataka to revive the Kolar mining lease. The township of Bharat Gold Mines (BGML) in Kolar was shut down in 2001 during Atalji’s tenure. The land and assets of BGML at Kolar Gold Fields (KGF) in Karnataka are held by the Union government in the name of the President. We are in a dialogue with the Karnataka government to revive this on a priority basis, so that shallow mining can start again.”
Karnataka is to acquire the BGML assets through its own mining company, Hutti Gold Mines. A joint venture will then be formed on a fast track with a private company called JMJ Minerals, comprising former BGML workers, which will provide the administrative, financial and technological support required to take up shallow mining at KGF. The Centre has also agreed to waive about Rs 1,700 crore liabilities that BGML is facing. The Karnataka government has come forward to acquire the assets under section 17/2 of the new MMDR rules. The central government is joining hands to revive the mines.
The mines ministry is considering all options, including revival of BGML. MECL has been engaged for the exploration of the dumps and mining area. The exploration has begun and will take around one year to complete. The future decision in respect of BGML would be taken after the exploration reports. The BGML is also pursuing with Karnataka government for extension of mining lease.
BGML, however, is beset with problems. The ministry of mines had got the approval of the cabinet for sale of BGML assets through a global tender in 2006. In 2008, a tender document was prepared for sale of assets which however met with legal issues as the company bench of Karnataka High Court had passed certain orders which were in variance with the decision of the cabinet. Finally, the Supreme Court in 2013 permitted the Centre to proceed with global render
BGML has an area of around 12,173 acres. There are large numbers of representations from various sources for excluding housing colonies from the global tender. BGML have 25 colonies covering of an area of around 3,753.77 acres. The majority of these houses are hutments belonging to economically weaker sections of the society and needs sensitive handling.
Valuation of BGML assets is another issue. It has four mining leases, one in Karnataka (Kolar Gold Field) and three in Andhra Pradesh) Chigargunta, Bisanatham and Yeppamana). Besides these mines, there are a large number of mining dumps spread in KGF area, which contains gold. As per the valuation done at the time of preparing a cabinet note in 2006, only the old reserves at Chigargunta and Bisanatham were estimated to more than 0.5 million tonnes and their estimated value taken at that time was Rs 421.07 crore. Tailing dumps values has been worked out to be Rs 84.03 crore. The cabinet note of 2006 valued BGML at Rs 272.96 crore.
As per the recent reserves/resources estimation done by the MECL, about Rs.6,000 to Rs 8,000 crore is extractable from these mines, in addition dumps may yield another few thousand crores of rupees.
According to MMDR Amendment Act 2015, mines that are not auctioned can’t be transferred. All the mining leases of BGML has expired and application for renewal of mines in Karnataka is pending whereas AP has determined the mining leases and refused to renew it. The leases at Karnataka are pending for renewal since 2012. Karnataka has stated they would renew the mining leases for BGML, but not in favour of any successful bidder in case of sale of its assets. In the present situation, the Centre is left with only the surface right of the land.
Though the mines ministry has requested the state government to take over BGML, Karnataka has refused to do so in view of the liabilities of the company.
The mines ministry is working to first clean balancesheet by clearing liability. BGML is in the process of assessing the assets and writing to creditors like banks and the state government and the power authority who are the major creditors besides the Centre for one-time settlement.
Also, BGML is ladden with huge scrap. The plant and machineries have become obsolete. BGML is exploring the possibility of getting these scraps auctioned and clear of liability.
Goyal’s effort is a part of an exercise to map the entire country using satellite imagery. Areas where there is a potential upside will be mapped out first. Goyal said, “Checking for geoseismic disturbances is part of the initial probe. By 2017-end, a big thrust will be given progressively to this exercise. As many as 100 mineral blocks have been identified by GSI based on regional mapping for G4 stage exploration. Of this, GSI (Geological Survey of India) has been allotted 30 blocks, MECL (Mineral Exploration Corporation) 30 blocks and notified PSUs like CIL, NTPC and NMDC 20. The rest will be taken up by private exploration agencies through a revenue sharing mechanism. The modalities for allotting blocks to private agencies are being developed by SBI Caps, which has been appointed as consultant.”
Ditto for high-grade bauxite mining, which is one of the focus areas along with gold. Again a part of an overarching larger three-pronged strategy to enhance availability of high value mineral wealth, provide impetus to the farm produce and skill development, according to Goyal.
On the mining front, exploration hopefully will get a big fillip and illegal mining will be controlled through this new plan. A new mining surveillance system – mining tenement system – has been introduced. The online register of mining tenement system is intended to bring about computerisation and automation in the functioning at state directorates of mining & geology of 11 states. Further, usage of satellite imagery will provide ballast to the government efforts. For instance, NMDC is in the process of establishing a remote sensing and GIS Laboratory in Hyderabad to interpret satellite data that will help identify and limit mineral potential areas to a smaller zone thereby negating the need for wide physical exploration. Once the mines are identified, they will be auctioned.
Goyal said the untangling of knots across major ministries like power and coal took a long time. “Initially I wondered, who will invest in the power sector. Rs 80,000 crore projects were stranded. Let me give you one example: The Rs 9,000 crore, 1,200 mw Teesta Urja hydel project was stalled for seven years with everyone squabbling over it. We got everyone back to the negotiating table and untangled the knots, by March, this will be up and running.”
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