INTERVIEW-India plans mining licence to attract foreign investors

NEW DELHI, June 29 Wed Jun 29, 2011 8:47pm IST

Stocks

   

NEW DELHI, June 29 (Reuters) - India's draft mining bill will offer a prospecting licence guaranteeing the holder the right to produce 100 percent of any find, as the country seeks to attract foreign money and technology to its underperforming mining sector.

The bill will also create an independent regulator for the sector, Mines Secretary S. Vijay Kumar told Reuters, and should be approved by end-2012.

"There is a dire need to attract capital and attract technology," he said, adding India's mineral potential matched resource rich western Australia and southern Africa but exploration had only scratched the surface so far.

The Large Area Prospecting Licence (LAPL) proposes areas up to 5,000 square kilometres (sq km) for hunting for resources, allocated for a six-year period. Around 570,000 sq km of the 3 million sq km country has high potential for finds, he said.

"If you find the deposit, you have the mining licence and you go for mining. If you don't find the deposit, you leave empty-handed," he said, adding companies would have to hand data from the area to the government.

"It is certainly a first that you go from reconaissance straight to mining," Vijay Kumar added.

India's mining sector has only opened up fully to private investors in recent years and state-run companies have lacked the funds and expertise to probe deeper than the top 50 metres or so where its iron ore and coal reserves are found.

Global mining giants BHP Billiton and Rio Tinto have only small ventures so far in the country. In Orissa state, for example, Rio Tinto has been negotiating since 1995 with the state government to develop iron ore deposits in a joint venture.

The mining bill should go to the government for approval after possibly a final meeting of a group of ministers on July 7 and could be presented in parliament in August. The bill could take a year or so to make its way through parliament.

The draft mining law also proposes foreign firms share some of their mining profits with local communities as the coalition government tries to reassure its large rural vote natural resources are not being carted away by outsiders, a resentment which Maoist rebels are tapping into in some areas.

Years of protests, sometimes violent, have delayed many projects, including South Korean steel maker POSCO's plant in Orissa state, the biggest foreign direct investment in India at $12 billion.

In addition to the new LAPL concession, the government is studying ways to bring venture capital into the sector, Vijay Kumar said, including offering tax breaks to investors and ways for Indian companies to access capital abroad. (Editing by Jo Winterbottom)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Press Event

Press Event

Modi takes tea, but no questions, in first press event as PM.  Full Article 

School Shooting

School Shooting

Two killed, four wounded in Washington state school shooting.  Full Article 

Sundar Pichai Elevated

Sundar Pichai Elevated

Google's Pichai to oversee major products and services.  Full Article 

Need For Reforms

Need For Reforms

Euro zone risks "relapse into recession" without structural reforms - Draghi.  Full Article 

Diwali Sales

Diwali Sales

Gold sales jump about 20 pct for Diwali - trade body  Full Article 

World Bank Rival

World Bank Rival

Three major nations absent as China launches W.Bank rival in Asia  Full Article 

Wal-Mart India

Wal-Mart India

Murali Lanka appointed as Wal-Mart India operations chief  Full Article 

Health Of Lenders

Health Of Lenders

25 European banks set to fail health checks - sources.  Full Article 

India Insight

India Insight

Kalki Koechlin on her role as a disabled girl in “Margarita, With a Straw”  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage