Dr Vanessa Guthrie, Non-Executive Director, Australia - India Council, welcomes the Indian government's recent reforms in the mineral mining sector while highlighting the key areas in the sector where India and Australia can work together post Covid-19 pandemic.
What are some of the key areas of interest in Australia′s mineral mining sector from the investment point of view?
There are three ways in which the Australian minerals sector can interact with India - direct investment into mining operations in India, bringing the Indian partners to Australia as investors in Australian projects, and through partnerships in the Mining Equipment Technology Services sector (known as METS). Foreign investment into mineral resources by both Indian and Australian companies have enjoyed limited success to date, with a focus on a few high demand, high-value products such as coal, diamonds, and copper. There is a significant potential to expand and improve on this experience into other minerals that are key to India's economic growth.
One key dimension for Australia's mining sector to explore with India is the development of critical and strategic mineral resources within Australia to supply India's growing manufacturing sector in new technologies such as energy efficiency, batteries, and digital technology applications. Investment in growing these mineral resources in Australia provides two key benefits to the Australia-India relationship; firstly it creates a key reliable supply chain for the Indian advanced manufacturing sector; and secondly, it provides a platform for investment of Australian mining companies into developing a similar resource base within the Indian mining sector.
Further, investment in partnerships by the Australian METS companies with the Indian mining industry will help to bring the depth of experience and expertise of the Australian METS companies to the Indian mining sector, who have openly recognised that Australia is a leader in best-in-class mining practices worldwide.
The Indian government recently unveiled reforms in the mineral mining sector. What is your take on this?
The Australian mining sector welcomes the reforms proposed by the Indian government to deliver a more open and transparent mining sector with predictable and reliable governance. In the past, investment by Australian mining companies into the Indian mining sector has been challenging due to the uncertainty of tenure, which has dampened the enthusiasm for ongoing direct investment. The reforms will help to shift the appetite of mining companies to invest in India with greater certainty about land access tenure, using a different business model which includes alignment with local partners and developing skills and expertise in the Indian economy.
Importantly, the reforms will also assist METS companies to more confidently offer their services to both Indian and Australian mining companies who may take up the opportunity to invest in mining in India with increased certainty over the longevity of their customers' tenure.
How is this move going to benefit the foreign investors
While the reforms are welcome news, they alone do not immediately resolve all the issues for foreign investment into India. It is important to recognise that the model which has delivered past success for Australian investment into offshore mining sectors (such as in Africa and Southeast Asia) may not be the most appropriate way in which to drive value from investment in the Indian mining sector. Instead, a long-term relationship approach, with local Indian mining companies, that helps to bring the highly valued skills and expertise of Australian mining in areas of operational excellence, technological innovation, health, safety and the environment may be of greater benefit to both Australia and India.
What are some of the areas in the mineral sector where India and Australia can work together post-Covid?
Clearly, the growth in critical minerals, such as lithium and rare earths, and the resurgence of base metals as inputs to new technology - including cleaner forms of energy - is a focus in the Australian minerals sector today. The Australian government is investing in both the exploration for critical minerals through the Critical Minerals Portal in Australia as well as research capability to increase our knowledge and use of these minerals in future battery technology through the Future Battery Industries Cooperative Research Centre.
These initiatives provide a good platform for the MoU on cooperation in the field of mining and processing of critical and strategic minerals between our two governments.
From the point of view of Australian and foreign investors, in the mining industry in India, what are the challenges that the Indian government should address?
Providing a robust system of regulation for mining in India is critical to the development of the sector, and the latest reforms are a good start. However, also providing robust, predictable, and efficient regulatory processes for safety, environment and land access are key to mining companies being able to develop their mines with certainty over their long-term investment horizon. The Indian government needs to address the challenge of an unnecessarily bureaucratic approach to mining development so that local communities in regional India can enjoy the benefits of economic development that mining activity can bring.
What are the lessons the Indian mineral mining sector could take from Australia?
India considers the Australian mining sector as world-class, a leader in best mining practices globally, not only in technology and efficiency of mining but also in safety, environmental rehabilitation, and sustainability. Australia can bring a depth of experience to India through almost 200 years of mining - whether that is in technology, regulation, operations, markets or sustainability - that has been gained through innovation and adaptation to changing community and market expectations of performance. The Australian mining sector is well-positioned to share the benefits of these lessons with India to ensure the Indian mining sector has a sustainable future.