India AMCR could hinder mineral sands

By Shruti Salwan
Published: Friday, 22 July 2016

The government's new proposals over the mining of atomic minerals have been criticised by the industry, which opposes both the mining guidelines and the classification of beach sand minerals.

In a bid to expedite the auction of atomic mineral resources and reduce its dependency on the import of these minerals, the government of India floated a draft version of the Atomic Minerals Concession Rules (AMCR), 2016 on 11 July 2016, inviting public comments.

The Beach Minerals Producers Association (BMPA) of India subsequently labelled the new act as a threat to the survival of existing miners, accusing it of being based on unscientific assumptions.

The guidelines set under AMCR 2016 specify requirements for the mining of atomic energy minerals – which include beach sand minerals like ilmenite, rutile, zircon, garnet, monazite, leucoxene and sillimanite – which are of high economic value as they are consumed in high-tech industries such as solar panels and hybrid car components.  

India’s beach sand mineral reserves occur in an assemblage that generally consists of ilmenite, rutile, zircon, garnet, monazite, leucoxene and sillimanite coexisting with each other. The major mineral in most of these deposits is ilmenite, however the rare earths-bearing mineral monazite is also found in large quantities. 

BSMA 
 Source: Beach Mineral Producers Association

Monazite is the principal ore mineral for rare earths in India and the country has an estimated reserve of around 12m tonnes monazite in beach sand mineral placer deposits along coastal tracts.

The new rules under AMCR 2016 have raised concerns among India’s private miners, who claim that the proposed changes – mainly pertaining to the minimum threshold limit value (TLV) of monazite set at 0.75% in the total heavy minerals (THM) and mining concession – are likely to restrict private mining and terminate all existing leases that do not meet these criteria.

If implemented, BMPA believes that the beach sand mine deposits with more than 0.75% monazite in the total heavy minerals will be reserved for state-owned companies, in this case Indian Rare Earths Limited (IREL) and Kerala Minerals and Metals Limited (KMML), a Kerala government enterprise.

The BMPA argues that the minimum threshold value for monazite is arbitrarily low and will result in around 75% of the total deposit area being reserved for state-owned companies.

According to AMCR 2016 rules, leases of existing operators will be terminated if they are not government organisations in cases where TLVs exceed guidelines. 

Speaking to IM, Vaikundarajan Subramanian, vice president of the BMPA and managing director of VV Minerals, who is seeking the removal of the termination clause, said: "The very concept of threshold limit value is unscientific," but added that a 5% threshold in total heavy minerals would be more appropriate.

V Subramaian 
Subramanian, vice president of the BMPA, says that the concept of threshold limit value is unscientific (Source: VV Minerals)

Furthermore, he added that there remains a question over jurisdiction regarding the the atomic mineral mining.

"There is uncertainty in the ministry regarding the jurisdiction of atomic minerals, as the Department of Atomic Energy (DAE) falls under the supervision of the prime minister and not the Ministry of Mines, from where the draft has been released. As such, we have appealed to the prime minister, Narendra Modi, to reconsider the proposed guidelines," Subramanian told IM.

On 14 July 2016, the BMPA appealed to Modi on behalf of private miners, asking for him to hold back the execution of the new AMCR 2016, claiming that the regulations, if implemented in their current form, will impact over 100,000 jobs, further affecting the country’s "Make in India" initiative, which was launched in 2014 by the Indian government as part of a wider set of nation-building initiatives to transform India into a global design and manufacturing hub.  

However, Balvinder Kumar, secretary of the Ministry of Mines, said that the ministry has already notified the industry about the AMCR 2016 and is now working to bring out the Exclusive Economic Zone Offshore Concession Rules.

According to the ministry, of the country’s 1,400km2 of atomic mineral-rich area, about 1,000km2 along the coast – where minerals are available below specified thresholds – will be offered for prospecting and production through competitive bids. State agencies will retain rights to operate the remaining 400km2.

The Ministry of Mines believes that the new set of concession rules will bring greater transparency in the case of atomic mineral leases, which will help develop domestic resources and reduce the country’s reliance on imports.   

While the private miners await a response on their appeal, Subramanian has specified that the present policy change will be a "U-turn" sending the industry back to the 1950s, as private miners were only allowed to operate after 1988, and the existing state-owned companies have not entered into any value-added projects for these speciality minerals.  

India holds a significant share of global beach sand mineral supply, including 35% of the world's ilmenite, 40% garnet, 71% monazite, 14% zircon and 10% of worldwide rutile.

Reclassifying minerals
Monazite 
( Source: BMPA)
.Beach sands ilmenite, rutile, zircon, monazite and leucoxene were classified as prescribed substances in the Atomic Energy Act (therefore requiring DAE clearance for production and processing) under the MMDR Act, 1957.

However, the BMPA noted that in January 2007, ilmenite, rutile, zircon, monazite and leucoxene were delisted as prescribed substances and the Ministry of Mines was also asked to delist the minerals from their atomic minerals status.

"While the list was revised in the draft MMDR Act 2011, categorising them under 'beach sand minerals’, the changes were not incorporated into the MMDR Amendment Act 2015, and the minerals continue as 'atomic minerals’," Subramanian told IM.

Atomic minerals are generally considered a source of energy, which can provide a substitute for coal, mineral oil and hydro-electricity.

However, as a result of their classification in the AMCR 2016, beach sand miners are concerned about losing their presence in the market.

An unexplored opportunity 

Despite accounting for 30% of global heavy mineral reserves, India accounts for just 4% of the world’s total production. The industry has faced tough competition from low cost Chinese imports, toughening regulations and a lack of investor-friendly policies, making it a difficult territory for further exploration.  

And, with 40% of the world’s ilmenite deposits, India currently contributes no more than 6% of world total output, producing more than 1m tonnes ilmenite.

The minerals are predominantly found in five states: Tamil Nadu, Kerala, Andhra Pradesh, Odisha and Maharashtra and there are only six companies operating in the sector, including state-owned IREL.

Subramanian noted that it was only after the poor performance of state-owned IREL that mining of these beach sand minerals was opened up to the private sector, as the company failed to add any value to the product in addition to suffering low production tonnages.

"IREL has three plants, one in the state of Tamil Nadu, one in Odisha and one in Kerala. Apart from Odisha, the two other plants in Kerala and Tamil Nadu are running at less than 30% of installed capacity," he told IM

The BMPA secretary believes that the new AMCR rules are part of a government strategy to take away some of the mining land currently being operated by private companies and give the rights to the state-owned companies. 

However, Subramanian believes that the government will reconsider the AMCR rules taking into account the fact that it is time to "liberalise" and allow private companies to handle materials like monazite. 

"Monazite has about 60% of rare earth minerals, which can bring in another manufacturing revolution in India, aligning with the prime minister’s vision of Make in India," he said.



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