Mining to India

Trends and opportunities

The market

India’s high economic growth rate in the last two decades has led to increasing demand for minerals.

The mining sector is an important segment of the Indian economy and is very diverse, spanning most geographical regions. India is endowed with huge resources of several metallic and non-metallic minerals.

India produces 87 minerals including:

  • four fuels
  • 10 metallic
  • 47 non-metallic
  • three atomic
  • 23 minor minerals (including building and other materials).

Indian coal has very high ash content, which is a significant factor for mining and power generation. Thermal coal forms a major part of the coal reserves with very moderate reserves of metallurgical coal. The country is also a significant producer of iron ore, lignite, copper ore, manganese ore and chromite.

Mining is concentrated amongst a few public sector companies and these include:

  • Coal India Limited
  • Singareni Collieries Company Limited
  • Steel Authority of India Limited
  • Hindustan Copper Limited
  • Manganese Ore India Limited
  • National Aluminium Company Limited
  • NMDC Limited
  • Neyveli Lignite Limited.

Over the last decade the private sector has played an increasingly active role in the mining sector and large Indian corporations including Tata Steel, Vedanta, Aditya Birla and Jindal are making significant investments in mining and related technology. Participation by the private sector, including international companies is allowed in coal washeries and across mining sectors, with the exception of coal mining and atomic minerals. 

Policy changes

In February 2018, the Indian Government announced it would open commercial coal mining to private-sector companies, including international firms. Previously, private companies were only allowed to undertake captive coal mining.

Under the new system, state governments will auction coal mines or coal blocks. The mine or block will be awarded to the bidder that offers the highest price per tonne of coal, which will be paid to the government on the actual production of coal. There will be no restriction on the sale or use of the coal.

Indian miners are seeking a range of solutions, including geomining consultancy services (resource estimation, project reporting, mine planning); mining exploration services; open-cut and underground contract mining; mineral testing; mining software (mine planning, management and fleet monitoring systems); mine safety solutions; material-handling systems; and environmental solutions (waste and tailings management systems).

In May 2017, the Indian Government announced a new National Steel Policy aimed at building a globally competitive, technologically advanced steel manufacturing industry in India. Under the policy, India is aiming to grow its steel production capacity from 100MT now to 300MT by 2030, as well as increase the use of steel in the infrastructure, automobile and housing markets.

To support its goals, India is seeking raw materials not available in the country, such as metallurgical coal, liquefied natural gas, refractory materials and limestone.

It is also looking for energy-efficient, environmentally friendly technology and services, including solutions that support the beneficiation of high-ash coal and iron ore, and ultra-low CO2 emitting steel-making technologies that could leverage thermal coal.

The policy will be administered by the Steel Research and Technology Mission of India (SRTMI), which will also lead research and development in the iron and steel industry. SRTMI is looking to partner with international research and academic institutions.

Opportunities

India imports thermal coal, metallurgical coal, copper concentrate and manganese ore to meet the growing demand for minerals.

The mining industry is increasingly focusing on optimising efficiency and profitability by:

  • improving operational performance
  • managing capacity utilisation
  • moving upstream in the value chain by adopting international best practices
  • incorporating the latest international mining equipment, technology and services (METS).

The Indian Government has implemented and is further envisaging, a series of initiatives to boost the mining industry, including:

  • An ambitious project by the Geological Survey of India for an online core business integrated system for geological mapping.
  • Emphasis on underground mining.
  • Allowing private companies, including foreign companies, to participate in non-coal mining and coal washeries.
  • Allowing private companies to participate in captive coal mining.
  • Encouraging private companies to develop and operate mines and washeries on behalf of major government miners.
  • Upgrading technology for higher productivity, greater safety and better environmental compliance.
  • The proposed Australia – India Centre of Excellence in Mining Training (CoEMT) located at IIT-ISM, Dhanbad.

Opportunities for Australian exporters to supply METS include:

  • geo-mining consultancy, especially where new and high productive technologies would be deployed
  • mining IT and Mine management systems
  • underground mining equipment
  • niche mining equipment, such as special pumps, valves, electricals
  • mineral beneficiation systems and components
  • mineral analysis and weighing, particularly for in motion situations
  • safety, including safety systems and equipment
  • environmental protection technology and equipment
  • simulation and training, including VR.

A growing number of Indian companies are investing in the resources and mining sector in international markets, including Australia.

Read a customer profile on Hindustan Zinc Limited (PDF).

Read a customer profile on Singareni Collieries Company Limited (PDF).

Read a customer profile on Coal India Limited (PDF).

Read a customer profile on Vedanta Ltd Sesa Goa Iron Ore (PDF).

India's steel industry consolidation spells opportunity for Australia

Implementation of India’s Insolvency and Bankruptcy Code (IBC) is accelerating consolidation of the local steel industry and potentially opening up opportunities for Australian resource and METS exporters.

Four steel companies (Bhustan Steel, Essar Steel, Monnet Ispoat & Energy, and Electrosteel Steels) referred to the National Law Tribunal for non-performing asset resolution under the new bankruptcy law contribute half of the steel sector’s bad loans. These four companies also produce close to 18-19 per cent of India’s current total capacity.

Putting production capacity in stronger hands will likely see an increase in steel production in India in line with the Indian Government’s national steel policy focused on increasing annual production capacity from 130 to 300 million tonnes by 2030-31, and drive higher demand for metallurgical coal and steel productivity related equipment and technology.

While early distressed company acquisitions have been made by India’s JSW Steel and Tate Steel, it is expected that new players will also enter the sector in this consolidation cycle and instigate a reworking of the entire supply chain. Likely disruption of existing vendor supplier relationships will create new opportunities for Australia’s highly regarded METS companies.

Year-to-date has seen an increase in iron ore exports from Australia driven by: the mines in Goa and Odisha being penalised for regulatory non-compliance and temporarily closed; a rise in domestic steel production; and an increasing mismatch between domestically available ore grades and the requirements of India’s blast furnaces. Longer term India’s rapid urbanisation and infrastructure development is expected to drive increased steel production and increased demand for Australian iron ore and metallurgical coal.

While increasing global trade protectionism could pose a risk to exports, the Government’s focus on infrastructural development is anticipated to consume 90-95 per cent of the steel produced for the next 20-30 years. As pioneers of innovation and technological advancement in the mining sector, Australian METS companies are well positioned to contribute to and benefit from India’s transformation initiatives.

Consolidation of the steel sector is expected to continue in to 2019 with acquired assets taking up to 18 months to maximise capacity utilisation. Austrade will continue to monitor and report on developments in the sector.

Competitive environment

India has had close business links with the United Kingdom, Europe, United States and Japan for the import of METS and growing links with Canada and South Africa as well as China at the lower end of the quality spectrum. There is an opportunity to raise the overall profile of Australian METS in India as a trusted and preferred partner.

Tariffs, regulations and customs

There are no quantitative import restrictions on METS.

Import duties are nominal for capital goods and apply equally to products from various international sources. The duty rates range from 7.5 to 10 per cent ad valorem. There are further levies on this customs duty amount, but they apply to locally made goods as well.

Customs duty on steam coal is 10 per cent and nil on cooking coal.

For any underground application of mining equipment, approval is required from the Directorate General of Mines Safety. This can be a time consuming and tedious process.

Participation by the private sector, including international companies is allowed in coal washeries and across mining sectors, with the exception of coal mining and atomic minerals. In the area of coal mining, only captive mining is allowed by private companies (including international companies).

Marketing your products and services

Market entry

The common routes for market entry are either establishing a presence in market and/or appointing a local agent/partner/distributor. Both routes have been successfully used by Australian and other international companies.

Setting up a branch office is a simple and cost effective way of entering the market, but a manufacturing facility requires the formation and registration of a local company.

Where appointing a local agent/partner/distributor, caution in the choice of this entity cannot be overemphasised. Australian companies should look carefully at the following aspects of the prospective Indian partner:

  • relevance of their present business
  • representation of other reputed METS companies, particularly any from overseas
  • spread of offices in tier two cities close to mining centres
  • numbers of trained and qualified staff
  • warehouse/maintenance/factory facilities, as applicable
  • turnover/financials
  • number of years in existence
  • standing in the market revealed by queries with some reputed mining companies.

One of the characteristics of the Indian market for METS is price sensitivity. To reduce costs, a number of overseas METS companies are progressively establishing a manufacturing base in India. Basic structures can be made locally at very low cost, without import duties and the critical components and technology can be supplied from the home plant. This trend is expected to become more common, as it allows the foreign company to expand market share, to export key components on a long term basis, and earn by way of dividends.

Distribution channels

For large value or sophisticated technology requirements, mining companies tend to make direct procurement through general or limited tenders. In these cases, the overseas company places the bid directly, with assistance from their local office or local partner.

For some items, especially consumables, sourcing through distributors or dealers is standard practice.

Transport

India has an extensive rail network, but due to very high demand and the limited capacity of rail transport, significant freight movement is carried out through truck transport.

There are a number of ports across the Indian coast. Some of the newer private ports have better facilities compared to the older government ports. These include a higher draft to accommodate larger vessels, better and more automated loading and unloading equipment, better warehousing/storage facilities and modern software for planning and tracking movements.

Links and industry contacts

Confederation of Indian Industry (CII)
Federation of Indian Chambers of Commerce and Industry (FICCI)
Federation of Indian Mining Industry (FIMI)
Ministry of Coal
Ministry of Mines

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

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