Chinku B Tech Project

Project Presentation-2008
National Institute of Science & Technology
PRESENTATION
ON
MANAGEMENT OF MINES AND
MINERALS-A CASE STUDY WITH RESPECT
TO STATE OF ORISSA
Under the guidance of

Mr. Bora Balaram
Debiprasan Swain And Sanjit Tripathy [1]

CONTENTS
• INTRODUCTION
• MINERAL RESOURCE OF ORISSA
• MINERAL LEGISLATION IN INDIA
• MINING POLICY
• INVESTMENT POLICY
• REVENUE FROM MINING
• METHODLOGY FOR CALCULATION OF ROYALITY
• ILLEGAL MINING
• CONCLUSION

INTRODUCTION
• Orissa is a maritime State on the East coast of India,

between 17 degrees 49minutes north to twenty-two degrees
thirty-four minutes North latitudes and 81degrees 27
minutes east to 87 degrees 29 minutes East longitudes .
• Orissa is the tenth largest state (in terms of geographical
area) in India and has about 4% of India’s population. One
of the poorest State of the Indian Union, with more than
40% of the population below poverty line .

INTRODUCTION(CONTD)
Morphologically, Orissa can be divided into five parts:

• 1. Coastal Plains: stretch from Subarnarekha in North.
to Rushikulya in South
• 2. Middle Mountainous Country: covers about three-
fourths of the area of the State
• 3. Rolling Upland: rich in soil nutrients, are the products
of continued river action
• 4. River Valleys: associated with Brahmani, Mahanadi
and Vansadhara rivers
• 5. Subdued Plateau: monotony of orography is
interrupted by the river valleys

MINERAL RESOURCE OF ORISSA

• Orissa occupies an important position in India’s mineral-map.

• Reserves of major minerals like Chromite, Nickel, Bauxite, Iron-Ore and
Coal in
• Orissa were approximately 97%, 95%, 49%, 33% and 24% respectively
of the total
• deposits in India during 2006-07. Other minerals like China Clay, Fire
Clay, Lime
• Stone, Quartz, Precious and Semi-Precious Stones, Copper, Manganese,
Graphite,
• Titanium, Vanadium etc. are also available in the State. Total production
of
• minerals and ores in the State during 2003-04 has registered an increase
of 23.95%
• in quantity and 40.72% in value

MINERAL RESOURCE OF ORISSA(CONTD)
• A number of mineral based industries have been set up in

Orissa which include :
• Rourkela Steel Plant (RSP), Aluminium Plants by INDAL and
National Aluminium Company (NALCO), and Charge Chrome
Plants by Orissa Mining Corporation (OMC),Ferro Alloys
Corporation (FACOR) and Indian Charge Chrome Ltd. (ICCL).
The other
• important mineral based industries established include Sponge
Iron Plants in Keonjhar district, Refractory in Dhenkanal
district and Mineral Sands Separation
• and Synthetic Rutile Plants in Ganjam district. Several Cement
Plants have been set up in the State and three Coal-based
Thermal Power Plants also have been set up.

MINERAL LEGISLATION IN INDIA

• FLOW CHART

MINING POLICY
• CENTRAL GOVERNMENT AT POLICY LEVEL :-
• Should announce a complete moratorium on

new mining projects in green field areas.
• The communities should have legally
enforceable right to natural resources - land
and mineral rights - towards ensuring
communities' command over natural resources

CONT…
• Should not disinvest mining companies, in

favour of private and multinational companies.
• Should not accept industry codes of conduct
• Should not grant license or lease to global
mining corporates or their joint ventures
• Should ensure right to mining by indigenous
people and their co-operatives

CONT…
• Should neither seek nor allow multilateral

banks such as World Bank, ADB or other
international financial institutions including
surrogates like FII, FDI, export credit
guarantee agencies, to invest in mining and
extractive industries
• Should promote Community Sector ownership
in mining projects through workers and
communities in mineral bearing areas

CONT…
• Should ensure mandatory higher standards in

relation to international environmental and
human rights in all mining projects in the
country
• Samata Judgement to be implemented while
granting license and lease to new mines.

CONT…
• The decision to mine should be taken only after EIA, social

impact assessment and public hearing processes already in
place are strictly adhered to.
Unequivocally respect and enforce Surface and subsurface

rights of adivasis and indigenous peoples and all mining-
affected communities, as well as their right to veto
unacceptable projects.
• At the Implementation level of Legal and Site Enforcement

CONT…
• Should enforce all entitlements of women with regard

to land and natural resources.
• Must ensure, where mining exists or must continue,
equal opportunities for women.
• Wages and working conditions for women miners
should strictly follow international standards and
agreements, and ensure equality and equity without
discrimination.
• Child labour should be strictly abolished

CONT…
• Enforce the true sprit of legal provisions for

occupational health and safety.
• Ensure social security benefits for all casual and
temporary mine workers.
• No discrimination in wages and benefits between
permanent and casual and temporary mine workers
• A part of royalty from mining and license fees of mines
should be distributed among mining affected
communities

INVESTMENT POLICY
• The Mines and Minerals (Development and Regulation) Act, 1957, (MMDR)
and the Mines Act, 1952, together with the rules and regulations under them
constitute the basic laws governing the mining sector. Further, the Government
has formulated the National Mineral Policy, which was revised in 1994 to permit
private investment in exploration and exploitation of 13 specified minerals.
• In 1999, the foreign investment policy has been further liberalised to promote
Foreign Direct Investment (FDI) in the mining sector:
• For exploration and mining of diamonds and precious stones, FDI upto 74
percent is permitted under automatic route.
• For exploration and mining of gold and silver and minerals other than diamonds
and precious stones, FDI is allowed upto 100 percent under automatic route.

CONT…
• In a significant relaxation of the general policy governing process of automatic

approval for FDI for the mining sector, the automatic route for FDI and/ or
technology collaboration is also available to those who have or had any previous joint
venture or technology transfer agreement, subject to a declaration being filed that
they have no existing joint venture for the same area and/ or the mineral concerned.
• • Private Indian companies setting up/operating power projects as well as coal and
lignite mines for captive consumption are allowed FDI upto 100 percent.
• • 100 percent FDI is allowed for setting up coal processing plants subject to the
condition that the company shall not do coal mining and shall not sell washed coal or
sized coal from its coal processing plants in the open market and shall supply the
washed or sized coal to those parties who are supplying raw coal to coal processing
plants for washing or sizing.

REVENUE FROM MINING

• The major revenue accrual to the state governments from the

mining sector is by way of royalty on minerals extracted from the
mines within the state.
• Besides royalty, dead rent also accrues to the states from lessees
who have not been operating their mines for any reason and thus
not paying any royalty.
• In addition to royalty and dead rent, the states also get some
revenues from the initial application fee payable by a concession
seeker, annual fee payable by RP/PL holder on the basis of the
area held, surface rent, sales tax or VAT, local area tax (e.g.
Panchayat tax), and stamp duty.

REVENUE CONT…
• Conceptually, royalty is a payment made by the mining lessee

to the state as owner of the mineral as a consideration for the
mineral extracted and sold by the lessee.
• Dead rent is a charge to be paid by the lessee for that area
included in the ML from which minerals are not extracted.
• The main purpose of levying dead rent is to discourage the
lessee from keeping the mineral property idle.
• The existing rates of dead rent are based on the area of the
lease and the value of minerals.
• Accordingly, the dead rent applicable is higher for the higher
value group of minerals

METHODLOGY FOR CALCULATION OF ROYALITY
• For calculation of royalty three systems are

prevalent worldwide. These are:
• Quantity based or rate per tonne,
• ad valorem or percentage of revenue, and
• profit based or percentage of profit.

CONT…
• QUANTITY BASED ROYALITY :-
• Quantity based royalty, also known as specific rate

royalty, is charged on the basis of a unit of quantity such
as weight, e.g. $ or Rupees per tonne.
• This system is easy to administer but is inefficient in
fiscal terms as the collection of royalty revenue is a
function of the quantity extracted, and rising prices do
not get reflected in the receipts.
• It is generally used for low-value and high-volume
minerals

ILLEGAL MINING
• Prevention of illegal mining is equally important for

augmenting revenue from the mining sector.
• Illegal mining is known to be widespread not only in
major minerals but also in minor minerals for which the
state government is competent to frame its respective
Minor Mineral Concession Rules (MMCRs).
• Not only is mining taking place at many places without
a valid lease.

CONCLUSION…
• Orissa has an estimated 85 billion tonnes of mineral

reserves remaining to be exploited.
• Besides coal, oil and gas reserves, the mineral inventory in
Orissa includes 13,000 deposits/ prospects of 61 non-fuel
minerals.
• Expenditure outlay on mining is a meagre sum when
compared to other competing emerging mining markets and
the investment gap is most likely to be covered by the
private sector.
• Orissa welcomes joint ventures between foreign and
domestic partners to mobilise finances and technology and
secure access to global markets.

CONT…
• Potential areas for exploration ventures include gold, diamond,

copper, lead, zinc, nickel, cobalt, molybdenum, lithium, tin,
tungsten, silver, platinum group of metals and other rare
metals, chromite and manganese ore, and fertiliser minerals.
• The main opportunities in the mining sector (excluding coal
and industrial minerals) are in the development and production
of surplus commodities such as iron ore and bauxite, mica,
potash, few low-grade ores, mining of small gold deposits,
development of placer gold resources..
• Considerable potential exists for setting up manufacturing
units for value added products.

CONT…
• Should announce a complete moratorium on new mining

projects in green field areas.
• The communities should have legally enforceable right to
natural resources - land and mineral rights - towards ensuring
communities' command over natural resources.
• Should not disinvest mining companies, in favour of private
and multinational companies
• Should not grant license or lease to global mining corporates or
their joint ventures. Should neither seek nor allow multilateral
banks such as World Bank, ADB or other international
financial institutions including surrogates like FII, FDI, export
credit guarantee agencies, to invest in mining and extractive
industries.

THANK YOU

Chinku B Tech Project

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Project Presentation-2008

National Institute of Science & Technology

Under the guidance of

Debiprasan Swain And Sanjit Tripathy [1]

Debiprasan Swain And Sanjit Tripathy [2]

• Orissa is a maritime State on the East coast of India,

Debiprasan Swain And Sanjit Tripathy [3]

Morphologically, Orissa can be divided into five parts:

Debiprasan Swain And Sanjit Tripathy [4]

MINERAL RESOURCE OF ORISSA

• Orissa occupies an important position in India’s mineral-map.

Debiprasan Swain And Sanjit Tripathy [5]

• A number of mineral based industries have been set up in

Debiprasan Swain And Sanjit Tripathy [6]

MINERAL LEGISLATION IN INDIA

Debiprasan Swain And Sanjit Tripathy [7]

• CENTRAL GOVERNMENT AT POLICY LEVEL :-

• Should announce a complete moratorium on

Debiprasan Swain And Sanjit Tripathy [8]

• Should not disinvest mining companies, in

Debiprasan Swain And Sanjit Tripathy [9]

• Should neither seek nor allow multilateral

Debiprasan Swain And Sanjit Tripathy [10]

• Should ensure mandatory higher standards in

Debiprasan Swain And Sanjit Tripathy [11]

• The decision to mine should be taken only after EIA, social

Unequivocally respect and enforce Surface and subsurface

Debiprasan Swain And Sanjit Tripathy [12]

• Should enforce all entitlements of women with regard

Debiprasan Swain And Sanjit Tripathy [13]

• Enforce the true sprit of legal provisions for

Debiprasan Swain And Sanjit Tripathy [14]

Debiprasan Swain And Sanjit Tripathy [15]

• In a significant relaxation of the general policy governing process of automatic

Debiprasan Swain And Sanjit Tripathy [16]

REVENUE FROM MINING

• The major revenue accrual to the state governments from the

Debiprasan Swain And Sanjit Tripathy [17]

• Conceptually, royalty is a payment made by the mining lessee

Debiprasan Swain And Sanjit Tripathy [18]

• For calculation of royalty three systems are

Debiprasan Swain And Sanjit Tripathy [19]

• QUANTITY BASED ROYALITY :-

• Quantity based royalty, also known as specific rate

Debiprasan Swain And Sanjit Tripathy [20]

• Prevention of illegal mining is equally important for

Debiprasan Swain And Sanjit Tripathy [21]

• Orissa has an estimated 85 billion tonnes of mineral

Debiprasan Swain And Sanjit Tripathy [22]

• Potential areas for exploration ventures include gold, diamond,

Debiprasan Swain And Sanjit Tripathy [23]

• Should announce a complete moratorium on new mining

Debiprasan Swain And Sanjit Tripathy [24]

Debiprasan Swain And Sanjit Tripathy [25]

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