30th august 2010

The government is planning to put in place a more transparent mining policy by designating
parts of mineral-rich regions as out of bounds for industry because of environmental
concerns, a move that can avoid episodes such as the recent ban on mining at Niyamgiri in
Orissa but could hurt expansion plans of companies located in such areas.

The plan is to divide the country’s mineral-rich regions into so-called ‘go’ and ‘no-go’ areas,
replicating a similar exercise carried out by the environment ministry for the coal sector. The
exercise, spelt out by the ministry of mines in a note prepared a few days ago, is to identify
areas where mining could be carried out without causing serious environmental damage.
The nub of the exercise is to identify areas of dense forest cover where mining will not be
allowed.

While such proposals have been mooted earlier, efforts to bring in greater transparency into
India’s notoriously opaque mining policy gained momentum after the environment ministry
on August 24 denied permission to Orissa Mining Corp to mine bauxite on the Niyamgiri
hills. The Niyamgiri bauxite was intended for Vedanta Aluminium, a joint venture partner of
Orissa Mining Corp. However, the project faced stiff opposition from the local tribal
population and from environmentalists who drummed up local and international support that
resulted in the shelving of the project.

The proposal has the backing of the Prime Minister’s Office (PMO), which has been taking
an active interest in matters concerning mining and its impact on the environment. The PMO
recently asked the group of ministers to prepare a national policy that will also spell out
areas that can be allowed for mining.

The mapping exercise proposed by the mines ministry will use data collected by the Indian
Bureau of Mines, a body controlled by the ministry which is involved in the development of
mineral resources and in protecting the environment in mining areas.

A recent study by global research body BMO, that backs higher investment in mining-rich
countries like India, says that among industrial commodities, copper, iron ore and
metallurgical coal are the top picks because of expectations of strong demand in China.

Of the 89 minerals produced in the country, four are fuel minerals, 11 metallic, 52 non-
metallic and 22 minor minerals. India is the largest producer of mica blocks and mica
splitting; it ranks third in the production of coal and lignite, barytes and chromite. It is the
fourth-largest producer of iron ore the sixth-largest of bauxite and manganese ore and the
tenth-largest producer of aluminum.