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There is doubt on the reality behind the government deciding to notify public sector units (PSUs) for prospecting work, to strengthen the mineral inventory database.
Many experts feel these PSUs aren't technologically equipped - in the absence of geologists, geophysicists, drilling machines, etc, for wide-scale exploration. And, so, might have to subcontract to companies in global mining, equipment, technology and services (METS).
Prospecting is a ground-level detailed exploration which is taken up only after you have first identified the area of mineralisation (known as reconnaissance).
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Union mines and steel minister Narendra Singh Tomar announced last Thursday on the PSU notification decision.
From data shared by the ministry of mines, of a total land area of 3.28 million sq km, only 570,000 sq km has obvious geological potential (OGP). As of 2012, according to the Ministry, only 5,046 sq km was under mineral lease, less than one per cent of the OGP. The prospecting work has been an insignificant part of the total area of the known mineral prospects and deposits.
Another issue PSUs are likely to face is finances. Most mineral-rich countries prefer to outsource this job to METS companies, which get their capital from venture capital or hedge funds. For, this is a high risk and high reward business.
"It takes years of drilling holes - one by one - to do prospecting. Till then (the data is found) everything is on hold. Which PSU can afford such immense costs?" asked the former official.
According to Anjani Agrawal, leader (metals and mining), EY India, for open cast mining, the prospecting costs are Rs 2,700-2,900 a sq metre in the case of coal or iron ore. Plus Rs 700 for logging and sampling charges, depending on the topography. "This is valid up to a depth of 100 metres only. For underground mining, it will be dependent on the depth of the deposits. For other minerals, it will be still higher," he added.
"No mineral-rich country has developed its mining industry solely on the basis of government exploration. The government in these countries creates favourable conditions for the private sector to explore," said the Federation of Indian Mineral Industries earlier, on the mining ordinance.
Kameswara Rao, leader (energy, utilities and mining) at PricewaterhouseCoopers agreed that the government companies will not have such reconnaissance and prospecting capabilities. "PSUs will instead nominate specialist private METS companies. These companies are far better placed to generate the information and enhance the mineral data repository," he said.
An expert, familiar with the working of PSUs, said successful exploration is always done on three axes - geological, economical, feasibility. PSUs are doing exploration only for geological data. "A mining company does not want to bid on (the basis of only) such data," he said.
TESTING TIMES
- What is prospecting? It is a ground-level detailed exploration, taken up only after you have first identified the area of mineralisation (known as reconnaissance)
- Experts feel PSUs aren't technologically equipped - in the absence of geologists, geophysicists, drilling machines, etc, for wide-scale exploration
- They might have to subcontract to companies in global mining, equipment, technology and services (METS)
- From data shared by the ministry of mines, of a total land area of 3.28 million sq km, only 570,000 sq km has obvious geological potential
- As of 2012, according to the ministry, only 5,046 sq km was under mineral lease, less than one per cent of the OGP
- The prospecting work has been an insignificant part of the total area of the known mineral prospects and deposits
- Another issue PSUs are likely to face is finances
- Most mineral-rich countries prefer to outsource this job to METS companies, which get their capital from venture capital or hedge funds
