Mineral-intensive growth would need the country to ease mining

Source: The post is based on the article “Mineral-intensive growth would need the country to ease mining” published in the mint on 29th December 2022. 

Syllabus: GS3- Industrial policy. GS1- Economic geography 

Relevance: Important minerals for economy 

News: The article explains the issues faced by the mining sector in India. It also explains the reasons for the increasing demand for minerals in India in upcoming times 

Why will the demand for minerals increase in the upcoming times? 

The Indian government is focussing on electric vehicles. These vehicles require six times more minerals than conventional cars. As a result of this; the demand for lithium, cobalt, nickel, and graphite alongside iron and bauxite will be enormous. 

PLI schemes for advanced chemistry cell batteries, solar PV modules, white goods and electronics manufacturing are expected to increase demand for energy-transition minerals. 

India has set the target of 500 GW of non-fossil fuel energy capacity. It will be largely met by wind and solar energy. As per IEA, onshore winds require nine times more minerals than a gas-fired power plant and solar PV panels require thrice more minerals than coal-fired power plants. 

India aspires to be the electronics hub of the world. Minerals will play a crucial role in achieving it. 13 minerals are used in a mobile handset. 

Traditional sectors like housing, infrastructure and transportation also require minerals. 

What are the issues faced by the mining sector in India? 

The Indian mining industry still faces regulatory hurdles that restrain the growth of mineral production. India’s expenditure on exploration particularly for deep-seated minerals like copper, zinc and gold has been abysmally low. 

Indian law does not let a mining lease beyond 10 sq km for a mineral in a state. 

Minerals like iron ore and bauxite also face the problem of double taxation in form of royalty on royalty. 

There is also differential treatment across minerals for calculating the Auction Sale Price(ASP). The ASP of bauxite is 3–4 times the actual market price. It hinders large-scale auctions of bauxite. 

What is the way forward for improving the condition of the mining sector? 

To encourage exploration, there is a need to shift the current “revenue maximising” model to an “exploration investment incentivising” model. 

In the auction regime, area restrictions on mining leases should be removed. 

The law must exclude royalty and other charges from the sale value to determine the Auction Sale Price(ASP). ASP determination for all minerals should be uniform. 

Private participation in the mining of critical minerals that have important non-atomic use like lithium should be allowed. Such non-fissile minerals should be excluded from Part B of the first schedule of the Mines and Minerals (Development and Regulation) Act, 1957.