A neglected case

By Ramesh Raja
In Issue 5
February 8, 2016
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Imperative for the government to address issues of heavy minerals industry

neglectedcase

Heavy minerals mining and extraction is a highly complex mining and chemical process

Call it a pathetic instance for India from economic point of view that even though it has nearly 35 per cent of heavy minerals’ deposits in the world, the country contributes merely four per cent of global production. Adding to the woes, the heavy minerals mining (HMM) industry constitutes only two per cent of the entire mining done in India. These minerals, often referred to be ‘strategic minerals’, are used for critical applications in diverse industries – electronics, ceramics, paints, paper, pigments, plastics, pharmaceuticals, aerospace, defense, etc. They are of utmost importance to the Indian economy considering their applications everywhere.

The HMM industry comprises mainly of ilmenite, zircon, rutile, garnet, sillimanite and leucoxene extracted from beach mineral sands found in tailings along the 7,500 kilometres Indian coastline. These minerals also include ones with high specific gravity, such as titanium and rare earths found only in Odisha, Andhra Pradesh, Kerala, Maharashtra and Tamil Nadu. Unlike other major minerals that are fully exhausted after mining, heavy mineral sands are replenishable due to constant winds and beach deposits; only 20 per cent is recovered as minerals, while the balance 80 per cent sand is backfilled into the mined area.

Although it is an emerging area in India, the state-owned PSU Indian Rare Earths Ltd accounts for most of the output. Tamil Nadu-based VV Mineral, Kerala government-owned KMML and Trimex Sands happen to be other major players in the sector. Except monazite, all minerals are mined together from the sand. Mining of monazite, however, is not open to the private sector due to its strategic importance of being the primary source of radio active thorium, which is an integral part of India’s three-stage nuclear power programme. Hence, the industry is strictly regulated by the Atomic Energy Regulatory Board (AERB).

As for utility, garnet is widely used as an abrasive in oil producing companies for corrosion control. Ilmenite and rutile are titanium feedstock used mainly for producing Tio2 pigment and small quantities in production of welding electrodes. Zircon is used in ceramic tiles as an opacifier and in refractory for insulation. And so on. In India, the major focus is on mining iron ore, coal, bauxite, etc. India imports most of its requirements as far as heavy minerals are concerned, which depletes forex reserves. Although India possesses the world’s largest reserves of ‘heavy mineral sands’ [~ 25- 28%], yet its exploitation is dismally low {~5- 6%}. USA, Australia and South Africa having only about 11-12% reserves each, have >25% share in the exploitation of the beach mineral sands.

Though this industry is a century old one, private sector was allowed entry only three decades back. It is nascent as there is little awareness about this industry and its immense potential to the Indian economy. According to V Subramanian, director of VV Mineral, India’s largest manufacturer and exporter of garnet and ilmenite, a number of policy bottlenecks is responsible for lethargic growth of the sector. “Eighteen agencies are involved in granting permission for mining and processing applications out of which seven are from the state concerned and 11 are from the central government. There are 30 conditions laid down by the Ministry of Environment and Forest (MoEF) while clearing mining projects, some of which are so impracticable. The CRZ (coastal regulation zone) requirements are also not in favour of beach mineral industry. For example, processing units cannot be set in the coastal areas coming under the CRZ. This leads to putting up plants far away from the mining areas which increases the transportation expenses as the remnant sand has to be brought back to the mining site for refilling. Export licenses are issued for only one year and renewal is a cumbersome process. 10 per cent export duty on Ilmenite makes the Indian industry very uncompetitive in international market. No other country has imposed export duty on ilmenite,” Subramanian enumerates.

Lack of port infrastructure, sufficient power and natural gas are the other factors responsible for the poor outcome from the industry. “Most of the mineral operations are in Tamil Nadu, Kerala and Andhra Pradesh. We don’t have port that’s deeper than 11–13 meters. This makes us ship in small ships, making the freight more expensive. While scarcity of adequate electricity makes our own captive generation using diesel generators very expensive (almost thrice the cost of grid power), dearth of natural gas forces us to use diesel or furnace oil, which makes us competitive against Chinese Tio2 manufacturers. Cheap imports of pigments from China is another issue affecting the domestic industry,” Subramanian says.

As discussed, there is abundance of opportunities in this sector. The industry could yield nearly Rs 30,000 crore in annual turnover to the exchequer if exploited sustainably. Worldwide, mining is akin to oxygen for the manufacturing industry. Without mining, manufacturing would soon collapse like a pack of loose cards. S Vaikundarajan, chairman and MD of VV Mineral says, “To boost India’s GDP and make inclusive growth a reality, mining needs to grow in a big way and hurdles cleared in the mineral supply of industry. Although the situation has improved now after the entry of private players, challenges remain in the form of lack of infrastructure, export duty and problems in obtaining mining leases. But given a slight attention from the government, we can easily surpass countries like Australia and South Africa and contribute more than 50 per cent of the world’s production.”

The next few years is going to be instrumental for this sector, especially in wake of Centre’s ‘Make in India’ program. The industry, if driven positively with policy incentives, can be the most promising sector. There is very little awareness about the heavy minerals in the minds of discerning public, but given the diverse applications of rare earths in sectors such as electronics, aerospace, defence, etc., it is going to raise the bar for countries like Japan which can’t do without these strategic minerals. From cars and clothes to cell-phones and computers, from soap and pens to medicines, toothpaste and other daily items, heavy minerals are present in some form or the other during the manufacturing process.

With the government having announced ambitious targets in power, infrastructure, housing and manufacturing, it needs to be noted that heavy minerals are crucial for the nation’s infrastructure, housing, development and manufacturing sectors. Multiple curbs and constraints in the production, processing and exports of heavy minerals will only make it more difficult to tap these resources to meet the national agenda.

In the current scenario, zircon demand in India is close to 130,000 tonnes, and India produces only 50,000 tonnes and rest is being imported. TiO2 pigment for instance, Indian demand currently is about 300,000 tonnes and only 60,000 tonnes is being produced in India and rest is being imported mainly from China and other developed countries. As for rutile, Indian demand is around 40,000 tonnes and only 18,000 tonnes is produced in India. Only ilmenite is being exported as infrastructure and a policy doesn’t support the value addition of ilmenite. Globally also, demand for these minerals are going strong and Indian manufacturers are hardly playing any role other than garnet.

As a matter of fact, India imports most of its heavy minerals requirements. The country first exports these minerals to China at lower prices and then purchases them back at 10 times the price in value-added form. This, consequently, leads to a heavy annual outgo of foreign exchange reserves. In its place, if the government made a positive policy structure and a facilitating environment, the domestic firms would be encouraged to set up value-addition facilities in India itself.

Subramanian says, “Our domestic market is very young and has a tremendous potential. Current Indian consumption of pigment is only 1.5kg / person, whereas developed countries typically used 4kg / person. The same trend applies for other minerals like zircon and rutile as well. Irony is 300 mining applications are pending all over India in this industry. If something is not done by the government to motivate this industry, we might end up depending on other countries for strategic minerals.”

Experts have lots of hope from the current regime led by Prime Minister Narendra Modi to give a new lease of life to the HMM sector. They seek a single window clearance for the mining industry as it takes a total number of 28 ministries and departments at state and central government levels, leading to a total gestation time of more than 2800 days (nearly eight years) severely impacting the industry. The Beach Minerals Producers Association calls for export incentives from the government to make India competitive with global counterparts. Restrictive import policy is another demand i.e., anti-dumping duty on TiO2, rutile and zircon should be done away with. Besides, there should be simplification in process of MoEF as well as CRZ clearances for heavy minerals mining or fix a particular time frame for granting the approval.

Furthermore, the ban on monazite mining by private entities must be revoked, permitting them to process monazite mined from their own facilities. Although it has been a long time demand of the Mining Engineers’ Association of India, processing may only be allowed under the watch and provisions of the Department of Atomic Energy (DAE) and the AERB, thereby any fears of misuse could be allayed. If the processes are fast tracked and necessary clearances are given to private miners, better development can be achieved in lesser amount of time.

To protect and promote national interest, it is therefore imperative that the government creates a positive policy framework that facilitates smooth operations and higher output in the heavy minerals industry. The sector will then be in a position to contribute its mite in ensuring the government’s manifesto promises of nationwide infrastructure development, affordable housing and 24×7 power for all are fulfilled.