Unit 1 l 3

Mine Economics
Unit 1 & Lecture-3
by
Dr. Abhishek Kumar Tripathi
Department of Mining Engineering
Aditya Engineering College
Mine Economics Dr. Abhishek Kumar Tripathi

NATIONAL MINERAL POLICY
• In any nation having a developed or developing economy mineral policy
comprises only one element of the total national policy.
• Mineral policy must be such that it enables mineral exploitation to contribute to
overall national objectives.
• Indeed, it is only in the light of national objectives that mineral policy can be
formulated (or modified) and implemented.
• In this contest the discipline of mineral economics can provide an essential tool in
the formulation, modification, implementation and evaluation of mineral policy in
relation to over-all national objectives.
Aditya Engineering College, Surampalem

• All Governments are becoming increasingly politically motivated to develop their mineral resources within their own
domains or to retain minerals within their sphere of commercial influence and control them by their nationals. Some
countries are tightening their, grips on exploitation of their mineral wealth by foreigners by bringing about legislative
and suitable regulations. Other directly controls the mineral industries by taking over both mineral ownership and
operation. Nationalization of mineral industries partly or wholly is also being widely practiced.
• Hence, mineral policies are complex in nature linked up with national prosperity and security, financial stability,
foreign policy and need to be adjusted with national requirements. While in countries like U.S.A., Canada,
AustraHence, mineral policies are complex in nature linked up with national prosperity and security, financial stability,
foreign policy and need to be adjusted with national requirements. While in countries like U.S.A., Canada, Australia,
the Government sets the stage for private enterprise for mineral exploration and production, there are other countries
like India, U.K., France, Sweden, etc. where Government also participates in mineral development in some measure. In
USSR and other East European countries the Government wholly controls mineral exploration and development.lia,
the Government sets the stage for private enterprise for mineral exploration and production, there are other countries
like India, U.K., France, Sweden, etc. where Government also participates in mineral development in some measure. In
USSR and other East European countries the Government wholly controls mineral exploration and development.

• Some nations like Japan and Germany have achieved mighty industrialization. Their main objective
is stockpiling, participation in other countries mineral resource development and use of substitutes.
These nations with little mineral raw material have achieved industrialization by importing low cost
raw mineral supplies, processing such minerals and manufacturing goods for export in world market.
• Minerals are valuable foreign exchange earners needed for industrial development. A suitable
mineral policy for developing minerals for internal use and a balanced export promotion are vitally
needed for developing nations. The state of nation economic development has implication for
mineral policy. Consideration must be given to the level of sophistication of existing primary,
secondary industries and to the existence, quantity and distribution of infrastructure such as power
plants, rail roads, roads, harbors, financial institutions etc.
• It is important to realize and accept that governmental activities in support of mineral resource
exploitation must complete for funds with activities that support other sectors of the economy.
Budget proposals for expenditures in support of mineral resource exploitation must therefore be
prepared in terms of the attainment of national objectives. It is at this critical level that the
application of mineral economics can play a key role.

41%
20%
21%
11%
6% 1%
REM (MT)
China
Brazil
Vietnam
Russia
India
USA

National Mineral Policy 2019
“Common Cause Vs Unions of India and Others”
Objectives
1. Effective Regulation.
2. Transparency
3. This could significantly address the issues project affected persons
surrounding the mines.

National Mineral Policy 2019
Key Features
1. Industry status
2. Right to first refusal
3. Private sector
4. Transportation
5. Fund
6. Export-Import
7. Iintergenerational Equity
8. Regulations

Factors influencing the development of mineral resource
objective
1. General national policies and objectives.
2. The political, economic, social and physiographic character of the nation,
3. The known or potential mineral resource base.
4. The unique characteristics of mineral resources and the mineral industry.

Essential Characteristics of Mineral Resources
1. Mineral deposits vary widely as to location, size, quality, complexity, and proximity to surface and
therefore economic potential.
2. Minerals are non-renewable resource. The aggregate supply of mineral resources can be considered
generally continuous through time as technology and capital utilization are allocated to seek new
deposits, mineral and non-mineral substitutes and more efficient exploitation and utilization. However
with disaggregation of analysis of individual industries, commodities and producing regions, the
known resources base is fixed and deplorable.
3. Mineral resources are unequally distributed among regions, countries and continents by types of
deposits and by economic usefulness. Depending on particular supply demand conditions minerals
vary in the extent to which they enter regional, national and international trade.
4. The long-term demand for minerals is expected to continue to grow at a rapid rate so that adequate
supplies will continue to remain a major challenge.

Essential Characteristics of Mineral Resources
5. Change in conditions of demand and supply including such uncertain variables
as new discoveries and technological innovation, affect the competitive position
and trade pattern of individual establishments, regions, nations and continents.
Such changes give rise to problems of cyclical instability, dislocation by
industry and region and mineral shortages for industry.
6. Since mineral resources occur in proximity to other natural resources, individual
resources developments should optimize the economic usefulness of all
resources within areas of multiple resource conflict.
7. Finally mineral resource exploitation activities can have socially undesirable
environmental effects.

Elements of National Mineral Policy
The general objective of a nation's mineral policy could be
expressed in the following terms:
"To develop and utilize the nations mineral resources to optimize
through time their net contribution to the attainment of national
objectives."
Individual components of mineral policy must be formulated so
that the policy, in total, is applicable or adaptable a wide range of
specific problems or classes of problems.

In terms of foregoing general mineral policy objective consideration could appropriately be given to the
following elements in the formulation of nations mineral policy.
a) To maintain an adequate domestic supply whether from domestic or imported sources of all minerals
at reasonable prices so that shortages or uneconomic prices do not impede development of secondary
industry.
b) To establish standards within which both the public and private sectors are expected to operate with
respect to land tenure, pricing and other marketing practices, operating and safety practices, land
conservation and reclamation and resource exploitation.
c) To encourage increasing degrees of domestic mineral processing and mineral based manufacturing
rather than exporting crude mineral products and to optimize return to the nation from minerals exported.
d) To encourage and expand domestic ownership and control of mineral resource industries taking
appropriate account of the continuing need for foreign capital while optimizing benefits derived from foreign
capital invested in nations mineral industry.

e) To maintain and improve the nations international competitive position in world mineral market.
f) To ensure that infrastructure necessary for national mineral exploitation is provided either by
Government or by industry. Infrastructure includes power, transportation and community facilities,
education, etc.
g) To ensure that requirements are met for technical and economic information systems, including
the development and dissemination of data such as geological maps and reports, statistics, etc.
h) To optimize any potential that mineral exploitation offers with respect to economic development
in disadvantaged regions and thus to alleviate regional economics disparities.
i) To forecast problems related to mineral depletion and declining regions in order that the
unfavorable impact on employment and local economic activities is minimized.

j) To conserve mineral resources in the sense of achieving optimum recovery from given deposits and minimizing
waste. Mineral policy should in appropriate instances provide for mineral conservation measures.
k) To establish standards of environmental quality and to minimize costs external to the mineral project itself proper
environmental planning so that mineral policy can be made accordingly.
l) To minimize external or foreign discriminatory actions affecting the nations mineral trade such as tariffs, non-
tariff barriers and administrative procedures.
m) To ensure that mineral exploitation contributes an equitable share of the tax revenue of the nation. It must assume
its share of the domestic tax burden commensurate with the role it plays in the overall economy of the nation.
n) To increase the development and use of domestic skills. One of the most valuable resources of a nation is a cadre
of persons possessing technical and managerial skills.
o) To ensure that mineral resources and mineral industry activities contribute to and reflect general government
social, economic, developmental, strategic and sovereignty policies and goals.

Implementation of a National Mineral Policy
It is finally necessary to articulate and implement the nations mineral policy. There are four principal avenues of
implementation.
First, there is a considerable merit in the issuance of a statement by the head of state or minister responsible for the
minerals sector about nations general objective and mineral resource objective along with a description of the principal
elements which comprise the nations mineral policy.
Second, for some nations (at very early stage of mineral exploitation) the policy statement can be translated into action in
respect to specific projects by means of negotiated contract between the government and party interested.
Third, for many, probably all, nations as their mineral economies nature the mineral policy statement will be articulate
into specific laws and regulations covering all the elements of nations mineral policy.
Fourth, nation tax laws and tax regulations can be a powerful factor in the implementation of mineral policy.
A last thought relates to concept of mineral resource management. This concept implies an active, dynamic role on the
part of Government in the evaluation, planning policy and Programme development and implementation and direction of
the nations mineral resource activities to ensure that they meet national objectives and in so doing, bring optimum benefit
to the nation.

Stakeholders in National Mineral Policy
• Governments: Central & State
• Private Sector (Domestic and Foreign)
• Host Population
• Government Agencies (IBM, GSI, State Directories of Mining and
Geology)
• Research and Academic Institution

Natural Resources of India
Resources are classified as either biotic or abiotic on the basis of their origin.
Biotic resources
Biotic resources are obtained from living and organic material.
• Population
• Forestry
• Fish
• Coal
• Oil
• Natural gas

Natural Resources of India
Resources are classified as either biotic or abiotic on the basis of their origin.
Abiotic resources
Abiotic resources are obtained from the non-living and non-organic material. Some of the resources,
like water and air, are renewable. Other resources like minerals are non-renewable and exhaustible
because they cannot be regenerated. Minerals have many categories like metallic, non-metallic and
minor minerals.
Metallic minerals
• Gold
• Copper
• Zinc
• Iron ore
• Chromite
Non-metallic minerals
• Salt
• Mica
• Clay
• Limestone
• Garnet group
Minor minerals
• Marble
• Ordinary sand
• Uranium
• Thorium

Name of the company
Year of creation
National Coal Development Corporation(NCDC) / Coal India
1956
National Mineral Development Corporation (NMDC)
1958
Bharat Aluminium Company (BALCO)
1965
Pyrites, Phosphates and Chemicals Ltd. (PPCL)
1960
Hindustan Zinc Ltd.(HZL)
1966
Neyveli Lignite Corporation Ltd. (NLC)
1957
Hindustan Copper Ltd.(HCL) 1967
1967
Bharat Gold Mines Ltd.(BGML) 1972
1972
Steel Authority of India (SAIL), formerly Hindustan Steel Ltd 1973

Factors which led up to Nationalization of Coal Industry in India
Nationalization of coal industry in India in the early seventies was a fall out of two related events. In the first
instance it was the oil price shock, which led the country to take up a close scrutiny of its energy options. A
Fuel Policy Committee set up for this purpose identified coal as the primary source of commercial energy.
Secondly, the much needed investment needed for growth of this sector was not forthcoming with coal
mining largely in the hands of private sector. The objectives of Nationalization as conceived by late Mohan
Kumaramangalam were; Conservation of the scarce coal resource, particularly coking coal, of the country
by.
• Halting wasteful, selective and slaughter mining.
• Planned development of available coal resources.
• Improvement in safety standards.
• Ensuring adequate investment for optimal utilization consistent with growth needs.
• Improving the quality of life of the work force.

Unit 1 l 3

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