India's Mining Industry controlled by handful of Mining Companies (Vedanta,Hindalco,NMDC,CIL) – India's Mineral Production, Policies and Issues

Mining Industry in India is an important economic sector which contributes significantly to the economy of India. India’s minerals range from both metallic and non-metallic types.The total working mines were 2,854 in 2007-08 with  569 mines belonged to coal and lignite, 676 mines to metallic minerals and 1,609 mines to non-metallic minerals.There were 755 mines in public sector and the remaining 2,099 mines in private sector.India is an important exporter of  iron ore, titanium, manganese, bauxite, granite, and imports cobalt, mercury, graphite etc. India mineral resources of the country are surveyed by the Indian Ministry of Mines, which also regulates the manner in which these resources are used. The ministry oversees the various aspects of industrial mining in the country.Note Mining in India comes under both the ferderal and state supervision.Coal Mining Companies in India are almost exclusively  government owned because of the government coal mines nationalization act in the 1970s.

Mineral Production of India

The total value of mineral production (excluding atomic minerals) was around $25 billion  during  2007-08 .In the total value of mineral production, the fuel minerals contributed the major share of Rs.70,336 crore or 61%. The rest was accrued from metallic minerals Rs. 24,038 crore or 21 %, nonmetallic minerals Rs. 3,446 crore or 3% and minor
minerals Rs.16,695 crore or 15% (source India Bureau of Mines)

Fuel Minerals

The value of fuel minerals in 2007-08 at Rs. 70,336 crore.The production of coal at 457 million tonnes,lignite at 34 million tonnes,petroleum (crude) at 34 million tonnes and natural gas (utilised) at 32,274 m cu m

Metallic Minerals

Among the principal metallic minerals, iron ore contributed Rs. 18,495 crore or 77%, chromite Rs. 2,020 crore or 8%, manganese ore Rs. 1,098 crore or 5%, lead (concentrate) & zinc (concentrate) Rs. 1,080 crore or 4%, bauxite Rs. 526 crore and copper (concentrate) Rs. 383 crore or about 2% each, gold Rs. 283 crore or 1%, while the remaining was jointly shared by silver and tin concentrates. The production of iron ore at about 206.45 million tonnes,Manganese Ore was 2.6 million tons,Gold only 2.8 tons,Bauxite 23.1 million tons,Chromite 4.8 million tons and Copper concentrate at 159 thousand tons.

Mining Reserves of India

India has significant sources of coal (fourth-largest reserves in the world), bauxite, titanium ore, chromite, natural gas, diamonds,  and limestone. India ranks 3rd in production of coal & lignite, 2nd in barites, 4th in iron ore, 5th in bauxite and crude steel, 7th in manganese ore and 8th in aluminum (source Wikipedia).In India, 80 per cent of mining is in coal and the balance 20 per cent is in various metals and other raw materials such as gold, copper, iron, lead, bauxite, zinc and uranium.

Mining Industry in India Issues

One of the most challenging issues in India’s mining sector is the lack of assessment of India’s natural resources. A number of areas remain unexplored and the mineral resources in these areas are yet to be assessed. The distribution of minerals in the areas known is uneven and varies drastically from one region to another. The accidents in mining are caused both by man-made and natural phenomenon, for example explosions and flooding. The main causes for incidents resulting in serious injury or death are roof fall, vehicular accidents, falling/slipping and hauling related incidents. In recent decades, mining industry has been facing issues of large scale displacements, resistance of locals, environmental issues like pollution, corruption, deforestation, dangers to animal habitats.

India Mining Policies

The Government of India has enunciated National Mineral Policy, 2008 which includes policy measures like assured right to next stage mineral concession, transferability of mineral concessions and transparency in allotment of concessions New Exploration Licensing Policy (NELP)-VIII was announced by the Government of India  in 2009 offering  70 oil and gas blocks covering a sedimentary area of about 163,535 sq km comprising 24 deep water, 28 shallow water and 18 on-land blocks

MINING COMPANIES

Privately owned Indian Mining Companies

Hindalco Industries Ltd. – With a market cap of Rs.29,000 crores, revenue Rs.5,900 crores & NPM 7.7% (Dec’10), Hindalco Industries is an industry leader in aluminium and copper. The metals flagship company of the Aditya Birla Group is the world’s largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia. Its copper smelter is the world’s largest custom smelter at a single location. It is a metals powerhouse with high-end rolling capabilities and has a global presence in 12 countries. The company’s copper unit, Birla Copper, produces copper cathodes, continuous cast copper rods and other by-products, such as gold, silver and DAP fertilisers. Birla Copper also produces precious metals, fertilisers and sulphuric and phosphoric acid. Hindalco’s major products include standard and speciality grade aluminas and hydrates, aluminium ingots, billets, wire rods, flat rolled products, extrusions and foil.

In 2007, Hindalco Industries Limited acquired Novelis (a spin-off from Alcan Inc). Novelis Inc. is the world’s leading aluminium rolled products producer based on shipment volume. The company produces an estimated 19 per cent of the world’s flat-rolled aluminium products and is the number one producer in Europe and South America, and the second largest in North America and Asia. Novelis is also the world leader in the recycling of used aluminium beverage cans. Hindalco Industries Ltd, also owns 51% of Aditya Birla Minerals Ltd. Hindalco-Almex Aerospace Limited (HAAL) is a joint venture between Hindalco Industries Limited and Almex USA Incorporated. The company manufactures high-strength aluminium alloys for applications in the aerospace, sporting goods and surface transport industries. Hindalco holds 70% equity while the balance 30% is held by Almex.

VEDANTA GROUP COMPANIES

• Vedanta Resources – It is an LSE-listed diversified FTSE 100 metals and mining company, and India’s largest non-ferrous metals and mining company based on revenues. There are other operations in Zambia and Australia. Vedanta Resources is engaged in copper, zinc, aluminium and iron ore businesses, and are also developing a commercial power generation business. There has been a significant growth in recent years. Revenue from the businesses increased from $3,701.8 million in 2006 to $7,930.5 million in 2010. The acquisition of Sesa Goa (51% of ownership) in 2007 marked the entrance in the iron ore business. Sesa Goa is engaged in the exploration, mining and processing of iron ore. The Indian copper business of Vedanta Resources is principally one of custom smelting and is operated by Sterlite (54% of share capital). The zinc business is owned and operated by Hindustan Zinc Ltd, India’s leading zinc producer. Sterlite owns 64.9% of the share capital of HZL. The aluminium business is primarily owned and operated by BALCO. Sterlite owns 51% of the share capital of BALCO. Vedanta Aluminium also contribute to the aluminium business. The company owns 70.5% of the share capital of Vedanta Aluminium, with Sterlite owning the remaining 29.5%.Note Vedanta recently entered India’s Oil and Gas Business through its intention of acquiring India’s second largest private listed company Cairn India though it still is awaiting for a government clearance.Vedanta which is India’s biggest Mining Company recently ran into a major controversy for violating environmental,forest and tribal laws at a mine in Niyamgiri hills in the mineral rich poor state of Orissa.The mining permit was cancelled despite strong support from the provincial government.Note a number of top investment funds have sold all their Vedanta shares on ethical concerns.
• Sesa Goa Ltd. – It  is India’s largest producer and exporter of iron ore in the private sector and is on course to be in the league of top four iron ore producing companies in the World. Apart from Iron ore it also produces pig iron and metallurgical coke. It has a market capitalisation of Rs.12,000 crores, revenue 0f Rs.1,700 crores & NPM of 49% (Dec’10). Sesa Goa Ltd was acquired by the Vedanta Resources in 2007, which owns 51% of the company. It was India’s largest producer-exporter of iron ore in the private sector by volume in 2007, according to the Federation of Indian Mineral Industries.
• Sterlite Industries (India) Ltd. – Another Vedanta Group company with a market cap of Rs.27,000 crores, revenues of Rs.4,000 crores & NPM 7% (Dec’10), Sterlite Industries is one of the fastest growing private sector companies. It is India’s largest non-ferrous metals and mining company and  is listed on the BSE and NSE in India. It is the First Indian Metals & Mining Company to list on the New York Stock Exchange. The primary business consists of Aluminum, Copper, Zinc, Lead and Commercial Energy.  The Indian copper business of Vedanta Resources is operated by Sterlite. The Vedanta resources owns 54% of Sterlite Industries’ share capital. Sterlite was India’s largest metals and mining company based on net sales in 2008.
• Hindustan Zinc – India’s leading zinc producer with a 79.7% market share by volume of the Indian zinc market in 2008, according to the Indian Lead Zinc Development Association & world’s second largest integrated producer of zinc & lead, with a global share of approximately 6% in zinc. Hindustan Zinc is an integrated mining and resources producer of zinc, lead, silver and cadmium, with a market capitalisation of Rs.64,000 crores, revenues of Rs.3,000 crores & net profit margin of 54% (Dec’10). The core business comprises of mining and smelting of zinc and lead along with captive power generation. Hindustan Zinc is a subsidiary of  Sterlite Industries which owns 64.9% of the share capital of HZL.

Public sector Enterprise (Government Owned Companies)

1. NMDC Ltd. – It was incorporated in 1958 as a Government of India fully owned public enterprise. NMDC is under the administrative control of the Ministry of Steel, Government of India. NMDC is involved in the exploration of wide range of minerals including iron ore, copper, rock phosphate, lime stone, dolomite, gypsum, bentonite, magnesite, diamond, tin, tungsten, graphite, beach sands etc. With a market cap of Rs.1,10,000 crores Rs.2,600 crores & 57% npm (Dec’10), it is India’s single largest iron ore producer and exporter, presently producing about 30 million tons of iron ore from 3 fully mechanized mines. NMDC has the only mechanized diamond mine in the country with a capacity of 1 lakh carats per annum in Madhya Pradesh. The company saw a follow on public offering
2. National Aluminium Company Ltd. – Incorporated in 1981, as a public sector enterprise of the Government of India, National Aluminium Company Limited (Nalco) is Asia’s largest integrated aluminium complex, encompassing bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and port operations. With a market capitalisation of Rs.24,000 crores, revenues Rs.1,400 crores & net profit margin of 17% in December 2010,Nalco is now India’s 2nd largest aluminum company
3. Hindustan Copper – incorporated in 1967, Hindustan Copper Limited is a public sector enterprise of the Government of India.  It is India’s only vertically integrated copper producing company encomapssing mining, beneficiation, smelting, refining and casting of refined copper metal. It is under the administrative control of the Ministry of Mines. The Company markets copper cathodes, copper wire bar, continuous cast copper rod and by-products, such as anode slime (containing gold, silver, etc.), copper sulphate and sulphuric acid. More than 90% of the sales revenue is from cathode and continuous cast copper rods.The company is supposed to come out with an IPO soon
4. MOIL – MOIL is the largest Mn Producer in India with around 1.1 million tons in 2010.The Company is planning to increase production by around 10% each year to reach 1.5 million tons by 2014. The 69 million tons of reserves that the company has is of high grade ores.The Company accounts for around 50% of the Mn production in India.The Company has set up JV with Indian Steel PSUs to set up value added manganese alloys production for the Steel Industry.The company came out with a very successful IPO in 2010.
5. Coal India Limited (CIL)– The State Owned Giant Coal Producer dwarfs the other companies through its sheer size,scale,cost and reach.The company has fared poorly in the current year after its IPO as its production growth has almost come to Zero.However its sells coal at such a low cost,that it could easily raise prices of coal in select categories to meet its financial goals.One of the safest investments in the stock market.It posseses high level of cash,low valuation compared to global peers and has a huge room to raise coal prices in the future.
6. Neyveli Lignite Corporation is a PSU like NTPC and is also involved in lignite mining company in India. The company is mainly based out of the southern state of Tamil Nadu and mines some 24 million ton of lignite per year with an installed capacity of 2490 MW
7. Singareni Collieries Company Limited (SCCL) is a PSU  jointly owned by Andhra Pradesh and the Federal Governm .The company is involved in mining coal  in the Godavari Valley region, with reserves of around 8 Billion Tons with production of around 50 million tons a year.Note listed currently still one of the major coal companies in India.

Others  – Other smaller companies are SMIOR,Mangilal Rungta,Bombay Minerals,Prabhu Das Vithal Das,OMC, MML and Industrial Development Corpn. of Orissa Ltd (IDCOL),Hutti Gold Mines,Indian Rare Earths Ltd,Uranium Corporation of India,Bharat Gold Mines.Note Steel companies like SAIL,Tata Steel and others have big captive mines of chromite,coal and iron ore which they use for their captive consumption.