Hoping for revival
Hoping for revival

Hoping for revival

After positive judicial interventions in mining activity, things are getting back to normal for mining equipment industry, even as greenfield projects are hard to come by.

Limestone segment comes next only to coal segment in machinery consumption. Mining machines like hydraulic excavators, dump trucks, tipper trucks, crawler dozers, wheel loaders, motor graders, surface miners etc., are used in these mining activities.

"Currently, the capacity utilisation in the cement industry ranges from 65 to 75 per cent depending upon geographical locations; but we see a continuous appetite for our customers in both brownfield and greenfield expansions," says Partha Mookherjee, Head - Mining Equipment Business, Larsen & Toubro Limited, which also offers complete mining solutions for limestone segment right from application engineering, optimum fleet requirement, cost per tonne analysis, lifecycle costing and crushing solutions.

About a few decades back, least capital cost (or 'L1') was considered to be the best option while procuring mining assets. But it has given way to lifecycle costing as a major procurement decision criterion. "The industry now appreciates that initial capital cost contributes only 15 to 20 per cent of the lifecycle cost whereas fuel and spare parts form over 60 per cent of the lifecycle costing," says Mookherjee.

There has been a disruption in mining activities starting with Supreme Court judgement in the coal and mining sector coupled with adoption of stringent norms in mining lease awards and resettlement and rehabilitation (R&R), which had slowed down the overall process of new projects coming up. "We are, however, hopeful that with the overall positive business scenario and growth prospects, the industry shall revive sooner than later. The slowing down of the industry has impacted the offtake of mining machinery but things have started looking up of late with enquiries and overall buoyancy," says Mookherjee. In the limestone industry, the impact was minimal for two reasons: the industry was operating at 70 to 75 per cent of their capacity and the brownfield expansion kept the clock ticking along with debottlenecking. However, the greenfield projects took a backseat for a while. The mining sector is currently sluggish due to judicial intervention, which has impacted the mining equipment business. However, construction sector in India is doing good due to increased demand from real estate, roads and infrastructure projects. "Due to high priority of the Government of India, infrastructure segment has created big market for these equipment," Mookherjee adds.

Building sustainable communities
The rising public sensitivities towards global warming and environmental protection, even the manufacturers have started paying attention to technologies that adhere to these norms. However, building sustainable communities around mines has become imminent and the Government of India had set up 'District Mineral Foundation' in 2015 with a view to accelerate the pace of development of mining districts, which figure among some of India's poorest and most underdeveloped districts. In about two years' since the District Mineral Foundation (DMF) came into existence, a total of about Rs 5,800 crore has been collected under DMF Trusts in various mining districts. However, the potential corpus is still higher, as in certain states such as Tamil Nadu and Uttar Pradesh, DMFs are yet to be roll out, according to the 'District Mineral Foundation (DMF): Status Report 2017' prepared by a team lead by Chandra Bhushan of the Centre for Science and Environment (CSE), an environmental and sustainability think tank.

Besides fund inflows to DMF Trusts, two determining factors related to DMF implementation are the institutional arrangements of DMFs and planning and allocations for DMF funds. On both these fronts, the progress in most districts is still in the inception stages, according to the report released on July 31, 2018.

The following are the edited excerpts of the report:

Institutional mechanism
In case of the institutional set-up, while most districts have identified the DMF body - members of the Governing Council and Managing Committees - the administration is dominated by government officials with poor representation of people. DMFs are functioning without a fixed administrative set-up. However, the encouraging part is that some key mining districts and states do recognise the need for this, and are working on it; at the time of the report, 20 districts were in the process of doing this. The least progress so far has happened with respect to developing DMF plans. Except for a few key mining districts in Chhattisgarh, Odisha, Jharkhand and Madhya Pradesh, planning has not happened in most. Some districts have identified certain areas to sanction specific works depending on the urgency to address the issue.
Ad hoc priorities
What comes out is that while most of the districts have made allocations for certain "high priority" issues as identified under the respective state DMF Rules, the allocations at various instances are ad hoc and short-sighted. In many districts, the DMF plans mechanically list the number and types of works to be undertaken, without any elaboration on the rationale of planning. Among the issues that have been prioritised in the first year of allocations by a majority of the districts, drinking water is a common one, followed by education and health care. In the first year of planning, the districts are also inclined to allocate significant parts of the sectoral allocation for various construction purposes. For instance, on the education front, with few exceptions, a big focus is on construction of school buildings, auditoriums, classrooms etc., with very little focus on providing supporting resources that can improve access and quality of education.
Suggested areas of focus
The key areas of intervention that DMFs should focus on can be broadly categorized under the following heads:
  • Invest in human capital and provide supporting infrastructure and resources.
  • Nutrition and food security: Improvement of nutrition status and food security can be ensured
  • Healthcare: Support for and access to better healthcare can be ensured:
  • Providing health insurance to people in affected areas.
  • Education: The quality of primary and secondary education can be improved
  • Clean water: Supply of clean water for health and hygiene can be ensured
  • Improve livelihood opportunities and make people employable.
  • Livelihood and employment opportunities can be improved by developing and incentivising livelihood opportunities around local resources and those relevant to the knowledge and skills of the local people.
  • Invest in and secure the future.
  • A part of the DMF money should be kept aside to ensure future security after mining activity is completed.
  • B.S. Srinivasalu Reddy

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