Mining industry gets a leg up, import reliance down – Industry News

India’s mining industry took a long stride this year supported by government policies in the critical minerals mining as it intends to boost domestic production, reducing dependency on imports and helping in realising the renewable energy targets. The government also has been encouraging companies for overseas exploration and production of critical minerals and rare earth elements.

Some key initiatives this year have been the launch of the auction of offshore critical minerals, amendments in the Mineral Conservation and Development Rules 2024 and Mineral (Auction) Amendment Rules, 2024. Since 2015, the government has so far successfully auctioned 441 blocks of critical minerals across various states. In the current fiscal year, 87 blocks of critical minerals were successfully auctioned, as per mines ministry data.

“The Indian mining sector in 2024 has demonstrated positive growth and a focus on key areas like self-reliance, technology, and sustainability. While challenges remain, the government’s policy support and the industry’s focus on modernization are expected to drive further growth in the coming years,” said Rajib Maitra, Partner, Deloitte India. 

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India’s mineral production (minerals other than atomic, minor, and hydrocarbon energy minerals) value saw a ~13% rise compared to previous year, as per data by Deloitte.

The MMDR (Mines and Minerals Development and Regulation) Amendment Act, 2021 removed restrictions on end use and allowed the sale of minerals produced by captive miners has encouraged the miners to ramp up production capacity, therefore, a better domestic mineral supply, Maitra said.

As much as 15 critical mineral blocks associated with lithium, cobalt, nickel and associated minerals auctioned in four  tranches of critical mineral block auction are likely to strengthen the domestic supply of the minerals in future and reduce import dependency, analysts say.

Going ahead, in 2025, the industry expects more thrust to be given to the mining sector with the much-awaited Critical Minerals Mission expected to be rolled out. The ministry of mines has prepared a cabinet note on the Critical Minerals Mission and the approval for the same is expected soon, a senior government official had said.

“There will be different verticals in the mission including asset acquisition. The action plan, the structure of the mission, financing, manpower etc. will have to be finalized too,” the official said. The mission will also include a vertical on acquisition of assets abroad, and one exploration in the country.

Anil Agarwal, Chairman, Vedanta Ltd said that the mission aims at reinforcing India’s critical mineral value chain across all stages – from exploration and mining to beneficiation, processing, and recovery from end-of-life products, to ensure self-sufficiency in fulfilling the industrial demands for critical minerals. 

The government is also in active discussion with countries including Australia, Russia, Argentina, Chile, Zambia, and Mongolia for potential acquisition of critical mineral assets. 

“Critical minerals are gaining even more importance due to their role in everything from electronic chips to solar panels. We see this as an opportunity. India has rare earth deposits larger than those in Australia and Canada. Encouraging sustainable and high-tech exploration will be key to tapping its true potential, and the private sector can contribute its expertise and scale to enable this,” Agarwal said.

NMDC Ltd noted that while the mining industry is growing to the tune of 6.5% in 2024, the iron ore market is undergoing transformative changes. 

“Mining is a cornerstone of the global economy, supplying essential raw materials for the construction, manufacturing, energy, and technology sectors. Leading economies are focusing on high-grade ore, investing in decarbonization initiatives, and reshaping priorities, while emerging markets are driving demand and brimming with new opportunities,” said a spokesperson of NMDC.

In 2025, commercial coal blocks and key mineral blocks are expected to come into operation, boosting India’s mineral production and reducing dependency on imports.

“The mines ministry is moving fast on the auctions of critical mineral blocks and the following year promises new opportunities that will set the stage for India’s sustainable and long-term progress,” Agarwal said. 

However, all said and done, there are still concerns over availability of adequate technology and the country’s ability to tap the domestically found minerals. The country’s import of critical minerals rose by as much as 11.5% to Rs 6.72 lakh crores in the financial year 2023-24 against Rs 6.02 lakh crores in the previous fiscal, according to data from the mines ministry.

Experts are of the view that to successfully mine these minerals, it is imperative that the government provide some kind of assistance in terms of viability gap funding and thrust to technology development. 

“A typical greenfield mine requires at least 4-5+ years to commercialize with significant investments. The commercial viability of the said blocks is challenging due to existing technologies and the nature of the reserves, likely leading to insufficient bids and the cancellation,” Rakesh Surana, Partner, Deloitte India had said.

In the Budget for 2024-25, the government also exempted as much as 25 critical minerals from import duties to give a boost to energy storage capacity and mitigate intermittency issues in scaling up the renewable energy. Analysts see the measure as an immediate solution to the issue but falling short in creating self-sufficiency.

“The custom duty waiver addresses immediate needs of the country but doesn’t eliminate the necessity of creating self sufficiency. These mines will take 4-5+ years to become operational. We’ll continue to rely on imports in the meantime,” Surana said.

Maitra also highlighted that the government should enforce one minor mineral policy across India to bring transparency and efficiency to remove overlapping jurisdictions at the state and central levels.