Only 5-20% mineral reserves explored to date in India: Indian Chamber of Commerce report

The reserves to production ratio of various minerals in India remain low reflecting significant unexplored opportunities leading to an urgent need to accelerate the exploration process, a report by the Indian Chamber of Commerce and Ernst & Young has pointed out.

The report- Indian Mining & Metals: Ready for Transformation-launched on Wednesday, talked of the lack of investment in exploration and inadequate information on resources as key issues facing the mining industry. The report pointed out that India has explored only around five to 20 per cent of its mineral resources to date, compared with almost 100 per cent geophysical and geochemical surveys in Australia.

Lack of sufficient transportation and logistics again proves to be a key challenge for the development of mining areas in remote locations which in turn affects the growth of steel industry in India also, the report said.

For instance, poor railway connectivity and its adequate capacity are major bottlenecks in output growth expansion for companies like Coal India. The report also adds that in order to increase its production, the government has to focus on developing an integrated network.

The coal industry is currently struggling to bridge the demand-supply gap which is leading to increasing dependence on the imported coal. This is affecting the country's import bill.

"With coal production growing at a sluggish five per cent CAGR [Compounded annual growth rate] over 2004/05-2013/14, the coal imports recorded a 16 per cent CAGR over the same period". However, the report added that things may improve in the future, with ongoing coal auctions "expected to boost coal production at a 12.2 per cent CAGR over 2014/15-2019/20 [estimate] from newly auctioned mines".

The report also questioned government's target to raise steel capacity to 300metric tonnes by 2025. "Delays in obtaining statutory, environmental and forest clearances and land acquisition problems have forced major steel players to stall or abandon projects worth more than Rs 900 billion in India," the report said.