India Country Market
Insights and Opportunities
Mining Equipment Sector
Overview: India is endowed with significant mineral resources. The country produces 86 minerals and has approximately 2,705 operational mines. India ranks within the top ten global producers for the following metallic minerals: mica, barites, coal & lignite, iron ore, chromite, bauxite and manganese. India's mining sector employs 1.1 million people. The value of mineral production in India, excluding atomic minerals, was approximately $22 billion in 2008, showing a growth of 3.9 percent. The revenue projection for the mining industry is $30 billion by 2012.
About 73 percent of the mining activities are in coal. India ranks third in worldwide production (491.25 million tons in 2008) and consumption (over 500 million tons) of coal & lignite. Coal accounts for approximately sixty percent of the country's energy need. The country has a potential coal-bearing area of approximately 22,400 sq. kilometers, of which only about 45 percent has been partially explored.
In 2008, 441 mining projects received environmental clearance from the Ministry of Environment & Forest. This is 64 percent higher than the number of approvals granted in 2007. The new liberal National Mineral Policy, announced in 2008, encourages private mining in thirteen minerals such as iron ore, manganese, chrome, sulfur, gold, diamond, copper, lead, zinc, molybdenum, tungsten, nickel and platinum. India's Investment Commission estimates that investment opportunities, valued at $30-40 billion, will be available over the next ten years to explore and develop new coal mines, manufacture and sell state-of-the-art mining equipment and technology, and to create related infrastructure for the off-take of mined coal. Sustaining the high growth of the Indian economy will depend on the accelerated pace of growth in mining of coal and other minerals.
Opportunities: Although the country has a fairly large domestic manufacturing base, the scope for direct imports of advanced equipment and technology is growing, particularly in coal mining. Moreover, the large domestic manufacturers have foreign licensing agreements, which allow indirect import of the critical components for local assembly and incorporation in the indigenous equipment. Given the recently liberalized Mineral Policy of the government, and with private entrepreneurs investing in mining industry here, the opportunity for U.S. firms to enter the Indian market through joint ventures, technical collaborations and operating leases has grown immensely.
As Coal India plans to double its production from underground mines in the next five years, it is expected to invest heavily in large and specialized mining equipment and services, including longwall loaders and draglines, jumbo drills, continuous years, miners, highwall miners, powered support systems, excavators, shovels and rock cutters, mineral screening / washing / crushing / grinding systems, mine safety systems, underground communication and safety systems. In keeping with the current emphasis on clean energy options, India will also purchase coal beneficiation, underground coal gasification, coal to liquid, coal bed methane and coal mine methane technologies. Services such as geophysical surveys on coal seams will be in demand. In addition to new equipment, some of India's private developers of mines are also interested in exploring the possibility of getting used or reconditioned equipment at a reasonable cost. There is a strong interest in joint ventures with large, international mine operators to explore virgin mines in India.
Coal India Ltd. (CIL), a large government-owned conglomerate, mines more than 80 percent of India's coal reserves. CIL, along with its eight subsidiaries, is the largest buyer of coal mining equipment in the country. CIL runs a large fleet of nearly 6000 heavy earthmoving machineries (HEMM), including 41 draglines, 670 shovels, 3200 dump trucks, 1000 dozers and 600 blast-hole drills. CIL‟s annual value of purchase is over $2 billion every year.
Coal India Ltd. (CIL) is the largest company in India in terms of coal production. Coal India has 145 ongoing projects, with a capacity of 332.5 million tons per annum, with an investment of $4.7 billion. The company offers both investment and export opportunities for U.S. companies in the mining sector. It is also actively looking at opportunities for buying coal assets abroad, including U.S.
Two other government-owned companies in South India – Singareni Collieries Ltd. in Andhra Pradesh and Neyveli Lignite Corporation in Tamil Nadu -- are other important end users of coal mining equipment. In the private sector, Tata Iron & Steel Company Ltd. (TISCO) in Jamshedpur, Jharkhand continues to be a major buyer of equipment for its captive coalmines. India's private sector power utility companies like Reliance, CESC, Jindal and Tata are also working on projects to develop, own and operate captive coal mines which will require the latest technology and equipment.
NMDC Limited is India's largest iron ore producer and exporter, mining about 30 million tons from its three fully mechanized mines. Under expansion plans, the company aims to produce 50 million tons by 2015. It is also in diversification mode, acquiring new mining leases in iron ore, coal and diamonds. It is looking for a partnership with an international mining company for its thermal coal mining project in West Bengal.
Other large mining companies in India include Essel Mining, Rungta Mines, Orissa Minerals Development Company, Vedanta Resources, Hindalco, Nalco and Steel Authority of India.