Showing posts with label mining companies. Show all posts
Showing posts with label mining companies. Show all posts

Saturday, April 13, 2013

Mining: The Game has Changed

Revenue up by 32% to $400 billion, profit up by 156% to $110 billion, total assets approaching $1 trillion... as the numbers suggest the global mining industry is on a roll once again. And that’s despite all words of caution from the experts. Escalating commodity prices and increased production to meet the rising demand from developing countries has certainly done the trick for the miners. by karan arora

Miners on a high
Despite short term fluctuations in the market, the financial results of the top mining companies remained spectacular in 2010. With a total of over $400 billion, cumulative revenue (Top 40) of the global mining industry witnessed its highest level in the past decade. However, the revenue composition of the miners definitely witnessed a change as commodity prices sky-rocketed last year. In fact, with a price rise of 111% last year, iron ore’s share in overall revenue of the industry increased from 15% in 2009 to almost 20% in 2010. Such price rise also helped miners to book higher margins as the bottomline of the Top 4o in the industry surged by a mind-boggling 156% during the year. A 51% rise in production too helped the miners.

Focus is back on exploration
With demand picking up in the global market, miners have again increased their investment in exploration. According to Metals Economics Group’s World Exploration Trends 2011, the total global spend jumped to $12.1 billion in 2010, up from $8.4 billion in 2009. And interestingly, the top 40 miners took lead in this as they contributed to just less than 50% of the total exploration expenditure last year. However, gold and base metals remained the highlight of the year as 84% of the exploration expenditure was made in them only. But then, a stiff price rise in these commodities motivated the mining companies to enter into a race in order to control more and more mines of these commodities to have a better future.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
 
For More IIPM Info, Visit below mentioned IIPM articles
 
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Sunday, March 24, 2013

Who’s The one Joking out Here?

The new Profit Sharing Formula introduced by The Ministry of Mines has upset miners in India. While they contest that The New Legislation will wipe off The Industry, The Government Strongly Believes otherwise. Who’s The one Joking?

After having displayed a laggard approach on the need of a more contemporary mining policy for years together, the government appears to have woken up and has shown great urgency in bringing out a new mining policy that promises to address mining-related concerns of most stakeholders. The new proposal, titled ‘The Mines and Minerals (Development and Regulation) Bill, 2010’, is an amendment to the MMDR Act, 1957, and has been approved by the cabinet to be put before the Parliament.

The new legislation, as the government claims, aims to open up the country’s resources to foreign and local private investment and increase the benefits from mining to local communities. The contours of the new bill make it mandatory for mining companies to give 26% of their net profit as compensation to locals displaced by the projects. The goals laid out by the government in drafting the legislation are wide-reaching and, in some cases, do seem uncompromising. “We are trying to give enough options to the local community by giving them a recurring financial compensation. It’s not a compensation for their land, it is to enable them to do something different. We cannot, sitting in government or industry, decide somebody’s way of life. All we can do is empower them,” says S. Vijay Kumar, Secretary, Department of Mines. The expansion of mining in India is key towards maintaining the GDP and export growth of the country. In a recent interaction with a parliamentary panel, Mines Minister B. K. Handique asserted that the share of mining sector to the country’s GDP, which currently stands between 2.5% and 3%, is poised to increase substantially. To be exact, as industry movements suggest, it could contribute around 5% by the year 2020.

However, talking about the present, despite the geologically established presence of huge mineral reserves in the country, the current scenario of mining in India is rather disappointing. Considering that the mining and construction equipment industry volume is around 40,000 to 45,000 units per annum amounting to a turnover of $2.6 billion to $3.1 billion, the Indian industry is in its nascent stage as compared to the $75 billion global market. Moreover, as per official estimates, out of the 5.75 lakh sq km available in India with potential minerals, only 75,000 sq kms have been explored in detail so far. Not to forget, the battle between the mining companies and the people displaced by their projects have contributed in a big way for this poor show. While neither the existing spotty government mechanism nor the mining industry has been able to provide any relief to the lives of those affected by earlier projects, the question remains, will the new bill be able to resolve these battles?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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