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Sustainable mining to green steel making
In challenging markets and beyond. © 2011 Deloitte Touche Tohmatsu India Pvt. Interesting times. Challenges to the miners. Deloitte contacts Page 02 Page 05 Page 09 Page 12 1 Winning.Sustainable Mining to Green Steel Making The Path to Choose Contents Iron ore and coal mining. The proposed amendments. Sustainability frameworks. . Ltd. The directions.
.Iron Ore & Coal Mining. Interesting Times.
Dependence on imports for met coal in near total. Environmental and forest clearances are being reviewed. Indian States inclined to curb exports of iron ore. Global and domestic demand is picking up. New business models for mine development have emerged. 3 Winning. Met coal prices are forecast to be an all time high. In challenging markets and beyond. © 2011 Deloitte Touche Tohmatsu India Pvt.Iron ore and coal mining in India – interesting times Steel prices are heading northwards again. Land acquisition has become key in project implementation. Acquiring and retaining talent has become a concern. Monitoring and controlling carbon footprint is being done. Government has macroeconomic objective of inflation control. Iron ore & coal mine allocations likely through competitive bid. Asset acquisitions in iron ore and met coal heating. Miners’ financial performance better than steel makers. New and existing plants are looking to secure supplies. . Ltd. New technology adoption to help reduce met coal imports.
In challenging markets and beyond. Mandated & compulsory contribution Social partnership approach © 2011 Deloitte Touche Tohmatsu India Pvt.Sustainable development is at the core Voluntary and marginal contribution Current state in mining industry • On time and correct payment of taxes • “Voluntary” contributions for local infrastructure • Focus on philanthropy • Mono-industry towns provide a unique CSR context 4 Winning. Ltd. .
. Challenges to the Miners.Proposed Amendments.
© 2011 Deloitte Touche Tohmatsu India Pvt. • Risks – – – – Competitive bidding can raise costs of production Lack of experience and expertise Forced backward integration can be organizationally tough Cost of procurement versus cost of mining 6 Winning. whether it will be on revenue/profit share or lump sum upfront payment or a combination.with bids reflective of information asymmetry • Impacts of bidding on the final product of the value chain and mitigation from the inflation management perspective.While competitive bidding has been talked about and look likely to be implemented. • Valuation . In challenging markets and beyond.competitive bidding or first-come-first-serve or 'beauty parade‟? • Modality of bidding . Ltd.Captive mine allocation • Policy on allocation . .assets of minerals with limited exploration will cause issues in valuation .
bidding process can motivate investors to take the best out soon.bidders wouldn't wish to take the risk of project delays or turn downs on these accounts when they have invested in allocation • Market for assets .bidders should be able to transfer lease so that liquidity of asset is maintained.mineral blocks need to packaged with these preparatory works for the bidders to comfortably bid and for the government to get better valuations of mineral blocks • Environmental and forest clearances . And. . 7 Winning. and not follow scientific mining • Development of infrastructure for mines . In challenging markets and beyond. the investor will have no recourse • Land acquisition. also government's intent of actual development of mines is not hampered. rehabilitation and resettlement issues .if government fails to develop the backbone. Ltd.Competitive bidding – post allocation risks • Monitoring of timely and planned development . © 2011 Deloitte Touche Tohmatsu India Pvt.
Ltd. . © 2011 Deloitte Touche Tohmatsu India Pvt. In challenging markets and beyond.Profit share with project affected people • Pros – – – Projects can get „social license to mine‟ Delays and cost over-runs can be checked Local goodwill for the project‟s financial performance • Cons – – – – – New and marginal projects may have investment issues Foreign investments may be affected Substantial rise in cost of production for existing miners Likely profit-shifting Lowering of voluntary contributions 8 Winning.
.Sustainability Frameworks. The Directions.
© 2011 Deloitte Touche Tohmatsu India Pvt. environmental and social • Establish mechanisms to monitor and assess corporate practices • Strengthen public access to information • Send the right messages • Empower local communities • Make clean production the required standard 10 Winning. In challenging markets and beyond. .Sustainability framework • Acknowledge the importance of corporate accountability – economic. Ltd.
particularly the government owned companies Reports have typically been ‘audit’ reports rather than a message to engage Lack of communication may be the reason for mining projects facing resistance • • Lack of measures of effectiveness of spending 11 Winning. . © 2011 Deloitte Touche Tohmatsu India Pvt. In challenging markets and beyond.Sustainability Process Strategize & Plan Implement & Review Report & Communicate • • Mining companies have taken initiatives Made commitments for sustainability programs • Greater success in implementation than review Focus on creating new facilities than strengthening existing ones • Mining companies have begun reporting • • • Lack systematic approach in many cases. Ltd.
Contacts Dipesh Dipu Director | Consulting | Mining & Metals Main: +91 (0) 40 4031 2000 Direct: +91 (0) 98495 53404 Email : ddipu@deloitte. In challenging markets and beyond. Ltd. 3rd Floor. Begumpet.P. © 2011 Deloitte Touche Tohmatsu India Pvt. 1-8-384 & 385. Ltd. S. Road. Hyderabad 500 003 India 13 Winning. . Gowra Grand.com Deloitte Touche Tohmatsu India Pvt.
com +91 (0) 80 6627 6112 Energy & Resources Leadership Debasish Mishra debmishra@deloitte. Ltd. In challenging markets and beyond. Namasivayam vnamansivayam@deloitte.Contacts GUIDE Leader V. .com +91 (0) 22 6619 8725 Energy & Resources Leadership Shubhranshu Patnaik firstname.lastname@example.org +91 (0) 124 679 2015 14 Winning. © 2011 Deloitte Touche Tohmatsu India Pvt.