News

September 04, 2008

India’s Economic Boom Rolls On, But There’s No Room For The Little Guy - Not In The Mining Sector, Anyway

By TC Malhotra in New Delhi, and Alastair Ford in London

India’s new liberalisation, and the consequent rise in economic growth rates, has attracted the interest of many foreign companies from many sectors. The mining sector hasn’t been left out, but it’s only the really big boys who want to play. Why is this? The short answer is that the bureaucracy is virtually impenetrable, and even if bureaucratic issues are put on one side, vested local interests have most opportunities sewn up. Two small miners that have shown an interest in India in recent years are Dwyka and Platinum Mining Corporation of India (PMCI), a duo which speaks volumes about investing in India. Dwyka is always on the hunt for the next deal, in order to hide the deficiencies of the last one, and was in India for years and did nothing. PMCI, meanwhile, imploded in a morass of boardroom wrangling, disputes over perks and, seemingly a secondary issue, arguments over the true quality of the platinum asset that was at the centre of it all. This is India’s track record as regards small mining companies, and perhaps disconcertingly for Indian nationalists, it seems that even Pakistan is more welcoming, as the progress made by Oracle Coal out there shows.

So from an economic perspective it seems incumbent upon the Indian authorities to take steps to attract the small miners, or to put it another way, to remove the obstacles that currently stand in the way. That’s if the vested interests will allow it, of course. The federal government has taken some positive steps to attract Foreign Direct Investment (FDI) in mining. To attract big investments by global mining majors like Rio Tinto and BHP Billiton, the government has lined up large-scale...