By Mansi Gupta
As Hon’ble Prime Minister Narendra Modi rightly states, “Self-reliance is not possible without a strong mining and mineral sector, as the two are important pillars of our economy.” The growth of India’s economy has long been intertwined with the mining sector, an ancient economic activity that has evolved significantly over time. The mining industry in India involves the extraction of vital resources such as coal, diamonds, gold, silver, platinum, copper, tin, and iron.
However, while mining fuels economic growth, it also presents challenges, particularly concerning environmental degradation. As India strives to achieve its Sustainable Development Goals (SDGs), the shift towards green mining has become imperative.
Economic Impact of the Mining Sector in India
The mining industry in India is a critical contributor to the nation’s economy, accounting for 2.2% to 2.5% of India’s GDP. Though this percentage may seem modest, the sector’s importance becomes evident when considering its contribution to the industrial sector, where it accounts for 10% to 11% of the output. The growth of India’s economy heavily relies on this sector, which supports manufacturing, construction, and energy industries dependent on the raw materials extracted from mines.
The mining sector in India is also a significant source of employment, directly providing jobs to around 700,000 people and indirectly supporting millions more through allied activities. These include mineral processing, transportation, and support services, all of which are crucial to the broader industrial ecosystem.
In terms of infrastructure development, the mining industry plays a pivotal role by supplying essential raw materials:
- Transportation Infrastructure: The construction of roads, railways, and ports relies heavily on raw materials like magnetite and soil.
- Energy Infrastructure: Coal mining operations are vital for the development of power plants and other energy-related infrastructure.
- Social Infrastructure: Through corporate social responsibility (CSR) initiatives, mining companies contribute to the development of schools, hospitals, and housing, particularly in mining communities.
India ranks among the top five global producers of key minerals, including bauxite, iron, and zinc. The country is also the second-largest producer of coal and the fourth-largest producer of iron ore. Major companies such as Coal India Limited (CIL) and NMDC are instrumental in driving the growth of India’s economy through their substantial contributions to GDP, employment, and infrastructure development.
Coal India Limited, established in 1975, is the world’s largest coal-producing company and a Maharatna enterprise. It operates across 83 mining areas in eight states, producing approximately 80% of India’s total coal. The company’s operations directly employ more than 200,000 people, making it a cornerstone of the mining industry in India and a significant contributor to regional infrastructure development.
Similarly, NMDC Limited, founded in 1958, is India’s largest iron ore producer, with operations in Chhattisgarh and Karnataka. NMDC’s iron ore supports nearly 30% of the country’s steel production, playing a crucial role in the industrial and economic development of India. The company directly employs around 5,000 people, with extensive indirect employment through various support services.
Environmental Challenges and the Need for Green Mining
As a major global player in mineral production, India faces significant challenges in balancing economic growth with environmental sustainability. The mining industry in India has the potential to contribute to all 17 Sustainable Development Goals (SDGs), particularly in areas such as clean water and sanitation (SDG 6), quality education (SDG 4), good health and well-being (SDG 3), affordable and clean energy (SDG 7), and climate action (SDG 13).
India’s ambition to become a $5 trillion economy necessitates increased activity in the mining sector. However, this must be achieved while meeting higher environmental, social, and governance standards, embracing digitalisation, decarbonising value chains, and addressing climate change. Traditional mining practices have led to significant environmental issues, including land degradation, deforestation, water pollution, and biodiversity loss.
The mining industry in India faces several challenges:
- Environmental Challenges: Illegal mining in certain regions disrupts river courses, lowers water tables, and harms ecosystems. Environmental impact and human rights violations are major concerns in this sector.
- Infrastructure: Inadequate infrastructure, such as poor transportation networks and energy supplies, hinders mining operations. The need for better infrastructure is critical to reduce logistics costs and improve productivity.
- Exploration: Exploration of new mining areas requires significant investment, advanced technology, and skilled labour, yet remains risky and underfunded.
- Land Acquisition and Permits: The complexity of land acquisition and the bureaucratic delays in obtaining environmental and mining permits slow down operations and increase costs.
- Policy and Regulation: India’s mining policies are often complex and inflexible, with governments imposing regulations to maximise resource benefits, which can include higher taxes and export duties.
- Technological Advancement: The industry needs to adopt more advanced and environment-friendly technologies to enhance safety and reduce environmental impact.
- Market Fluctuations: The mining sector must navigate volatile global markets where commodity prices fluctuate due to various factors, including the COVID-19 pandemic, which caused significant disruptions in 2020.
As global focus shifts towards technological advancements and green energy, the demand for minerals such as lithium, cobalt, and rare earth elements has surged. These minerals are essential for batteries, electric vehicles, and renewable energy technologies. For instance, the price of lithium carbonate increased by over 400% between 2020 and 2022, driven by its critical role in electric vehicle (EV) batteries.
Embracing Green Mining for Sustainable Growth
Green mining represents a forward-thinking approach, focusing on new technologies and practices that minimise environmental damage. Tata Steel’s Noamundi Iron Mine exemplifies this approach, with advanced water management systems, rainwater harvesting, and afforestation programmes. The company has planted over 1.2 million saplings, achieving more than 40% green cover in the mining area. Additionally, Tata Steel has installed a 3MW solar power plant at the Noamundi mine, promoting renewable energy use.
Hindustan Zinc’s Rampura Agucha mine is another example of sustainable mining, where innovative technologies reduce waste and increase operational efficiency. The adoption of paste fill technology by Hindustan Zinc reduces the need for surface disposal by backfilling mined-out areas with processed material. Vedanta, another major player, has shifted its focus to community development, investing in healthcare, education, and livelihood projects that benefit more than 3 million people in its operational regions. Companies such as LMEL in Gadchiroli are also following suit, and putting greater emphasis on green mining.
Global Best Practices in Sustainable Mining
Mining provides essential raw materials that drive technological advancement and economic growth. However, this must be balanced with a commitment to environmental and social responsibility. Sustainable mining is not only ethical but essential for long-term economic viability.
To achieve sustainable growth, the mining industry must focus on five key areas:
- Turning Mining Waste into Profit: Globally, 100 million tonnes of mining waste are generated annually, posing environmental risks. By reducing, reusing, and re-treating mining waste, companies can turn potential liabilities into economic opportunities, ensuring safer and greener mining operations.
- Water Conservation: Mining consumes vast amounts of fresh water. Companies must reduce their water usage, ensure discharge meets the highest environmental standards, and recycle water for other applications, such as agricultural irrigation.
- Adopting Renewable Energy: Mining operations require significant energy consumption. By switching to renewable energy sources like solar, wind, and hydroelectric power, the industry can reduce its carbon footprint and improve sustainability.
- Supporting Long-Term Employment: While mining provides jobs, these are often short-lived. Sustainable business opportunities that are not dependent on nearby mines are essential for long-term employment and community stability.
- Restoring the Land: Mining degrades soil quality and biodiversity. Sustainable practices include limiting the impact of operations and rehabilitating sites post-mining through reforestation and the removal of infrastructure and waste.
Several global companies set benchmarks in green mining practices. For example, Rio Tinto, a leading global mining group, has integrated sustainability into its core operations. The company focuses on reducing greenhouse emissions, conserving water, and protecting biodiversity. At its Oyu Tolgoi copper mine in Mongolia, Rio Tinto has implemented advanced water recycling methods and community engagement programmes, recycling over 85% of its water and significantly reducing freshwater consumption.
BHP, another major mining operator, is committed to achieving net-zero greenhouse emissions by 2050. BHP’s sustainable practices include the use of renewable energy, innovative waste management techniques, and land restoration. At its Escondida copper mine in Chile, BHP has invested in a desalination plant to provide a sustainable water source, reducing dependence on freshwater resources in the arid region.
At home, in Gadchiroli, players like LMEL are looking building environmentally friendly infrastructure to transport raw material over long distances.
Conclusion
The growth of India’s economy is deeply connected to the mining sector. The liberalisation of mining policies in the 1990s spurred a surge in exports, particularly of iron ore, which saw a 27% increase by 2004, significantly boosting the country’s foreign exchange reserves. In 2021-2022, post-pandemic mining activities contributed to India’s 9.5% GDP growth, highlighting the sector’s importance in economic recovery.
In the fiscal year 2022-23, India exported approximately 10.37 million tonnes of steel worth $14 billion, driven by demand from construction and automotive sectors. This underscores the mining industry’s critical role in boosting foreign exchange earnings and supporting economic growth.
To ensure the continued growth of India’s economy and the sustainability of its mining sector, a transition to green mining practices is essential. Achieving sustainable mining operations requires concerted efforts from all stakeholders, including the government, mining companies, and local communities. As India moves towards a greener future, the mining sector will play a crucial role in driving economic
