September 24, 2019 / 5:04 PM / a month ago

Indian rare earth miner V.V. Mineral targets African assets after local ban

NEW DELHI (Reuters) - India’s V.V. Mineral, a beach sand miner hit by a domestic law which effectively banned private companies from extracting rare earth deposits, has applied for licenses to start operations in Kenya and Tanzania, the company’s chairman said on Tuesday.

V.V. Mineral was India’s largest exporter of rare earth minerals such as garnet, ilumenite and rutile over the last decade, but it started facing regulatory and legal trouble in 2013, which culminated in a blanket ban this year on beach sand mining by private companies.

“We have applied for two licenses to extract beach sand minerals in an area covering 300 square kilometers in Kenya, and a 15 square kilometre area in Tanzania,” S. Vaikundarajan, chairman and founder of V.V. Mineral told Reuters.

Vainkundarajan counts Australia’s GMA Garnet Pty Ltd, Rio Tinto PLC and Iluka Resource Ltd as his major competitors. Garnet is used as an abrasive, while ilumenite is used to make paints and rutile is used in the welding industry.

India accounts for over 10% of global reserves of ilumenite and rutile and has “major garnet deposits”, according to the Indian Bureau of Mines.

In February, the government effectively barred private companies from mining rare earth minerals found on India’s coastline through an order that restricted such firms from extracting minerals with traces of monazite, a source of the radioactive metal thorium.

Industry lobby group Federation of Indian Mineral Industries (FIMI) on Tuesday asked the federal government to allow private companies to mine for beach sand minerals.

“India is probably the only country where instead of improving the regulatory mechanism, we close the mining operations,” FIMI president Sunil Duggal said at the group’s annual general meeting, where the country’s mines minister Pralhad Joshi was present.

V.V. Mineral exported garnet to countries including the United States and Germany. The two countries’ embassies lobbied the Indian government in 2017 to resolve an “impasse” over mining in the southern state of Tamil Nadu - a market controlled by the company - according to an Indian mines ministry document seen by Reuters.

Tamil Nadu, where the company is headquartered, ordered companies to stop beach sand mining in 2013 to facilitate inspections into allegations of illegal mining in the region, and some independent parties filed cases alleging wrongdoing by V.V. Mineral. Vaikundarajan denies all such allegations.

V.V. Mineral does not expect to restart mining in India in the next couple of years, but Vaikundarajan said he hoped to start operations in Africa soon.

“We expect to get all clearances to start development in 3 months to one year, and hopefully we can start production soon after,” he said.

Reporting by Sudarshan Varadhan; editing by Emelia Sithole-Matarise

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