Long-term mining investments need long-term resource visibility

Authored by - Dr V M Suntharavel Muthaiah, assistant professor, School of Mechanical and Materials Engineering, Indian Institute of Technology-Mandi.

India’s mining sector is entering an important transition. Demand for minerals is rising as the country expands infrastructure, steelmaking, renewable energy and manufacturing. At the same time, a number of legacy captive mining leases are approaching an important regulatory milestone around 2030.

Mining (HT File)

The law provides mechanisms intended to ensure continuity. The more relevant question is whether companies making investments today, often with economic lives extending 15 to 25 years, have sufficient visibility on the terms under which they will access the same mineral resources beyond the end of the decade.

Mining is among the most capital-intensive industrial activities. Expanding output may require underground mine development, new shafts, beneficiation facilities, logistics and downstream processing capacity. These assets are not built for three or four years. Their economics are assessed over decades.

India’s mining law recognises this reality. Under Section 8A of the Mines and Minerals (Development and Regulation) Act, mining leases granted under the post-2015 framework are generally for 50 years. For certain captive mining leases granted before the 2015 amendment, the law provides for their tenure to extend until March 31, 2030, completion of the renewal period or 50 years from the original grant, whichever is later, subject to prescribed conditions.

The 2030 transition is relevant for other established miners. Hindalco’s Durgmanwadi bauxite mine in Maharashtra, for example, has a mining lease running until March 31, 2030.

JSW Steel has also highlighted the expiry of multiple captive iron ore leases by 2030 as an important sectoral development while strengthening its raw-material security. It is targeting nearly half of its iron ore requirement through captive sources by Financial Year (FY) 2030-31.

A holder of a mining lease for captive purposes has a right of first refusal when the lease is auctioned after expiry. Once the auction establishes the highest final offer, an eligible incumbent can match that offer and become the preferred bidder.

The law also allows advance action. The Mineral Concession Rules require states to conduct auctions of expiring leases well in advance and state that the process should, as far as possible, be completed at least six months before expiry.

This is an important continuity safeguard. But continuity and investment visibility are not the same thing. An auction completed six months before expiry can facilitate an orderly transition. A company investing today in a new shaft, mine expansion or downstream facility may, however, be committing capital for another 15 or 20 years. Knowing the post-expiry economics only shortly before expiry may therefore be less useful than knowing them several years earlier.

The auction outcome also influences mine economics. Bidders quote a percentage of the value of mineral dispatched, and the successful bidder pays the state an amount linked to that percentage. Until the final offer is established, an incumbent may not know an important component of its future cost structure.

Hindustan Zinc provides an instructive example. The company is not waiting for 2030 before investing. It has outlined a multi-year growth capital expenditure programme of around ₹40,000-50,000 crore across mining, beneficiation and smelting. Its first phase includes an approximately ₹12,000 crore 250 ktpa integrated zinc smelter with matching mine and mill capacity, targeted for completion in FY2029.

Hindustan Zinc reported 468.6 million tonnes of reserves and resources at the end of FY2026, supporting mine-life visibility of more than 25 years. It is also investing in exploration to sustain a 25-plus-year mine life as capacity expands.

Its continued investment reflects confidence in the existing mining framework. The scale and duration of such investments also illustrate the value of having greater visibility on post-2030 economics before the current tenure ends.

A structured three-to-five-year transition roadmap for major leases nearing expiry could help provide greater visibility and predictability. Early preparation of auction documentation and timely completion of the auction/ROFR process could also enable a smoother transition, while allowing the existing lease to continue until its statutory end date.

This would preserve competitive bidding and price discovery while giving the successful operator earlier visibility over the terms governing the next lease period.

Other major mining jurisdictions address long-term visibility differently. British Columbia allows mining leases of up to 30 years with further renewal terms for compliant operators. South Africa provides mining rights of up to 30 years with a route to renewal, while Queensland allows a lease to continue while a properly made renewal application is considered.

These systems are not directly comparable with India’s auction-led regime. They nevertheless reflect a common principle: Long-life mining investments benefit from a clear route to continuity. India can pursue the same objective within its existing framework by providing clarity earlier.

Existing mining districts also contain geological knowledge, infrastructure, processing facilities, logistics, skilled manpower and supplier ecosystems built over decades. Additional investment in such assets can often bring new production on stream faster than developing entirely new mining areas.

The value of continuity extends beyond the mine itself. Established mining operations are often closely connected with local economies through employment, procurement and long-running community development programmes. In addition to royalties, statutory levies and other contributions to the exchequer, mining companies undertake investments across areas such as education, health care, livelihoods, water, infrastructure and community development. Greater visibility over the operating horizon can therefore also support longer-term planning for the communities and local ecosystems that have developed around major mining districts.

This makes continuity relevant not only from the perspective of mineral production, but also for sustaining employment, local enterprise and community development in mining regions.

India has already recognised the long-cycle nature of mining by providing 50-year tenure for new leases. As the 2030 transition approaches, a three-to-five-year transition roadmap, with key auction outcomes known two to three years before expiry, could provide greater certainty without changing the basic architecture of the law.

For an industry investing today in assets that could remain productive into the 2040s and beyond, earlier clarity can help translate mineral resources into faster and more confident capital deployment.

(The views expressed are personal)

This article is authored by Dr V M Suntharavel Muthaiah, assistant professor, School of Mechanical and Materials Engineering, Indian Institute of Technology-Mandi.