The year that went by - in fact, the last two years - put the country´s mining sector through one of its toughest tests. The Supreme Court ban on iron ore mining in Karnataka in 2011 and in Goa in 2012, alongside the Coalgate scams and environmental restrictions severely impacted this sector, and led to a considerable dent in the growth of the CE sector during this period.
Happily, there have been some positive moves. The Central Empowered Committee (CEC) of the Supreme Court has recently directed the Karnataka government to expedite the process of renewal of iron ore mining leases which have expired. The CEC, which held a meeting with all stakeholders, has also decided to delink Category A, B and C mining leases.
On the coal front, environmental restrictions have significantly hampered coal production in the country, leading to an increase in dependence on coal imports. So, what is the way forward? The Competition Commission of India has suggested restructuring of the coal sector by introducing more number of players to facilitate competition and put an end to the monopoly, especially of Coal India (CIL). Some reforms have already been suggested by the government, like setting up of a coal regulator, introducing PPP framework with state-owned CIL to increase coal output and transparent and open bidding process for allocation of captive coal blocks.
On the political front, with Veerappa Moily taking charge as the Environment and Forests Minister, the investment landscape is expected to change and big-ticket projects worth around Rs 10 lakh crore, already cleared by the environmental appraisal panel, be given the green signal. What´s more, the RBI´s recent decision not to hike the repo rate has also been seen as a positive development by the industry.
There is an urgent need to rationalise and reduce the royalty rates and corporate taxes; and providing a simple and transparent mechanism for the granting of mining leases or prospecting licences through competitive bidding will boost growth prospects. Hopefully, 2014 will usher in better times for this vital sector.
Happy New Year!