New mining policy: Canadian, Oz cos concerned over profit sharing

KOLKATA: Leading mining companies from Australia and Canada have expressed concerns over the new mining policy that aims to keep 26% of profits for projectdisplaced people.

“The profit-sharing issue has raised a number of concerns. Investors would prefer a system which ensures a royalty on turnover, rather than a portion of profits for rehabilitation of impacted communities in and around the mines,” Peter Linford, Australian Trade Commission’s senior trade & investment commissioner, South Asia said.

This comes on top of regulatory issues like land access and environmental controls that have seemingly impeded growth of the country’s mining sector, he added. “I have spoken to a number of Aussie mining companies and they point out that productivity of the Indian mining sector can be increased by almost 50% if some of these issues are resolved.”

This includes policy regarding awarding mining licence (ML) to companies which needs to be overhauled. Currently, a company which has invested in prospecting and exploration of a deposit is given first preference when it comes to mining licence, though there is no guarantee regarding this. In such a situation, few companies would be ready to pump in funds for exploration , which is an uncertain and high risk business. “In Australia and Canada, successful exploration companies are ensured of getting ML, which minimises the uncertainty associated with any project,” Mr Linford added.

Mining dominated 85% of trade between Australia and India with coal, gold and copper leading the way. More recently we have seen an increasing number of mining companies from Australia opening representative offices in India.

This includes mining services and software companies too. Some 42 Australian mining companies are participating in the ongoing International Mining Machinery Exhibition 2010 in the city and over 70 of them are attending it.

Similarly, some Canadian companies from Ontario are also participating the IMME meet. We are also seeing a greater engagement in resource purchase and assets by Indian companies in Australia, he added.

Ontario based companies like Hard-Line Solutions, N L Technologies, Nordic Mine Technology, Parts Headquarters Inc., Wardrop, Minefield Fabricators, Process Research Ortech Inc. and Arkbro Industries which are participating in IMME 2010 also pointed out in India regulatory issues like getting a mining license after investing in exploration remain an area of concern.