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MARCH 25, 2007
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Mobile Security
Today, it is all about information and how the right information is sent to the right people at the right time and right place. Uncertainty about how to secure mobile phones in the face of increasing threats is slowing individual adoption of mobile applications. There are many facets of mobile security, including network intrusion, mobile viruses, spam and mobile phishing. Analysts expect big telecom companies to develop security solutions on various security platforms.

Rough Ride
These are competitive times for the Indian aviation industry. As salaries zoom, players are scrambling to find profits. Even the state-owned Indian is now seeking young airhostesses to take on the competition. It is planning to introduce a voluntary retirement scheme for airhostesses above 40 years. On an average, they draw a salary of Rs 5 lakh a year. The salaries of pilots, too, are soaring. According to industry estimates, the country needs over 3,000 pilots over the next five years.
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Business Today,  March 11, 2007

The Wealth Underneath
It's been 14 years since the government opened up mining to foreign investors, but there have been few takers because of unfriendly regulations. Will the upcoming National Mineral Policy (2007) change things for the better?
Scratching just the surface: What lies underneath could bring a richer haul
They came; they saw; and then nothing happened. That, in a nutshell, is the story of foreign direct investment (FDI) in India's mining sector, which hasn't quite managed to live up to its potential-only around $100 million (Rs 440 crore at current exchange rates) has been invested over the last 16 years, and worse, this accounts for a mere tenth of the total foreign investment approvals in the sector. But now, the sentiment seems to be improving, as was evident in January-end at the World Economic Forum at Davos. On the sidelines of the forum, when senior Indian government functionaries were courting global mining companies, the response was overwhelming. Says Minister of State for Commerce Ashwini Kumar: "At the table were more than half-a-dozen mining majors, including some of the biggest names like BHP Billiton, Rio Tinto and Alcoa."

There's a reason for this; and no, it isn't merely because global prices of metals are rising. The government is now in the process of fixing the policy bugs that have impeded private investments in the mining sector. The National Mineral Policy (NMP) 2007 will be considered by the Union Cabinet shortly. What are the salient features of the policy? And will it make a significant difference to various stakeholders?


NMP 2007 proposes the following:

Automatic and seamless transition from prospecting rights to mining rights.

Security of tenure for concessionaires.

Grant of Large Area Prospecting Licence, whereby a company can undertake prospecting work over a large area.

Private-public participation for mining infrastructure.

Easy and transparent norms for transfer of prospecting and mining licences.

Seamless Clearances

Sitting on a gold mine: Provided the National Mineral Policy 2007 delivers
A serious regulatory disconnect today plagues the key aspects of the mining business-reconnaissance, prospecting and mining. For example, the current laws do not protect the investments of an explorer who strikes a mineral-he does not automatically get the rights to extract it or transfer the extraction rights to another party.

Since the upside of a discovery is not protected by law, very little investment has flowed into the sector. As a result, the only minerals that have been exploited are those close to the surface of the earth-like hematite (iron ore), bauxite (aluminium) and limestone (which is used in the manufacture of cement).

The new policy seeks to fix this problem. Hence, a seamless linkage from prospecting to mining is envisaged. And investors, including some global companies looking to infuse some much-needed cash into this sector, are visibly excited. Says Nik Senapati, Country Manager, India, Rio Tinto: "The policy recommendations sound positive; we'd be happier still if the government offers some clarity on issues relating to the security of tenure."

So, which minerals will become attractive under the new regime? Titanium is a mineral you quite literally have a brush with every morning (it is there in your toothpaste). It is also abundantly used in airplanes since it is lightweight and strong. Its mineral base (limelite) has the highest presence in the beach sands of the country, though it is among the least exploited metals across the globe. Clearly a new-age metal, its exploitation will require more than mere security of investment in various business segments. Here's why: over 400 mining projects are languishing on account of environmental clearances. Through the NMP 2007, the government plans to ease this bottleneck by reducing the extent of regulation. "Environment Impact Assessment will not be made mandatory for projects where the mining area is less than 50 hectares," says a government official.

Time Matters

Stuck in red tape: Iron ore mines
But rules and procedures are just a part of the problem. The state is wont to drag its feet on approving a project; this often stretches to several years. But, under the proposed policy, if a state fails to dispose of applications within a prescribed time limit, an independent tribunal will be empowered to force a decision on the state. Yet, the industry is not convinced. "What good will a policy do if the project file doesn't move past the bureaucrat's table?" asks R.K. Sharma, Secretary General, Federation of Indian Minerals Industries (FIMI), the apex body of the minerals sector in India. "It is incumbent upon the government to ensure transparency and fair play. Until then, it will, at best, be a moth-eaten initiative."

The policy, when it becomes official, will also result in a windfall for states. It proposes that royalty be calculated on an ad valorem basis; this, it has been estimated, will result in the states earning additional revenues of Rs 2,400 crore per annum. The present fixed tonnage-based royalty gives them only about Rs 600 crore every year.

Ironing out Issues

The policy is expected to provide a fillip to mining of minerals like limelite, gold and diamonds, but there's one mineral that requires very little push, if at all-iron ore. Here, the problem is not of insufficient reserves or lack of interest on the part of investors. The roadblock here is socio-political in nature. For example, the Government of Orissa is working actively with South Korean steel major POSCO Steel, to expedite its $12-billion (Rs 52,800 crore) 12 million tonne project in the state. But the acquisition of land is proving to be a problem. The contentious issue: rehabilitation of displaced persons. The Centre has to finalise its Resettlement and Rehabilitation Policy, and the absence of a uniform policy across the country is leading to investment uncertainties. Soung Sik Cho, CMD, POSCO India, however, professes optimism but goes little beyond saying that he is confident that POSCO will "acquire the required land in the near future with strong support from the Orissa government".

While states like Orissa, Jharkhand, Chhattisgarh and Karnataka are keen to invite investments from companies-like POSCO, and Tata Steel-that are willing to invest in "value addition" (read: setting up manufacturing capacities), they are reluctant to open the gates for those interested only in mining and exporting ore, either to neighbouring states or to overseas markets. The proposed policy addresses this issue by forcing states to award mineral concessions even in the absence of value addition. Says V.K. Jerath, Secretary, Department of Industries, Government of Maharashtra, where several sponge iron units are located: "We already have a concessional policy, which encourages captive use of mineral resources, in place. NMP 2007 will, however, force us to fine tune this."

The issue of iron ore exports is fast turning into a hot political debate. Union Minister of Steel, Chemicals and Fertilisers Ram Vilas Paswan recently shot off a letter to Prime Minister Manmohan Singh and Finance Minister P. Chidambaram demanding that exports of iron ore be banned. "Exports will lead to faster depletion of resources, thereby forcing our units to close down," he says. Is the domestic steel lobby behind this? One can only speculate. The state-run National Mineral Development Corporation (NMDC), which exports around 3 million tonne of high grade iron ore annually, has also had to face political heat. Explains B. Ramesh Kumar, CMD, NMDC: "In 1991-92, we were exporting 74 per cent of our total production against only 3 per cent today. In fact, the spurt in demand for steel has ensured that we mostly service the domestic sector." There's obviously an urgent need to have some clarity on the issue, but the constraints of coalition politics have ensured that it remains on the backburner. Budget 2007, meanwhile, has slapped an export duty of Rs 300 per metric tonne on iron ore and Rs 2,000 per metric tonne on chrome ores. How this affects the plans of individual companies will soon become evident.

Legal cases also sometimes play spoilsport. Arcelor Mittal's request for ore reserves from the Chiria mines in Jharkhand is stuck on account of a public sector steel giant Steel Authority of India's legal claim on it. The Centre is driving an out of court settlement since it feels that the reserves far outstrip sail's needs in view of their future expansion plans. L.N. Mittal, Chairman of the company, meanwhile, is being wooed by the governments of both Jharkhand and Orissa. He is planning to set up a 12-million tonne plant at an investment of Rs 40,000 crore.

But all these investments and proposals hinge crucially on NMP 2007. Will it deliver what it promises? Experts say that given the immense job creation potential of the mining sector, the political class has a vested interest in seeing it through. Quick clearances and security of investment are, after all, sine qua non for greater investment flows to the sector. And if the policy fails to live up to expectations, the minerals will remain where they have been for millions of years.

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