Placers: National Mineral Policy of India

Beach Placer: Mineral Policy of India

Kerala Minerals and Metals Ltd. (KMML), using technology from Defence Metallurgical Research Laboratory (DMRL) (indigenous), is setting up a sponge production facility with an installed capacity of 500 tonnes, investing about Rs 1220 million (US$ 27 million) to cater exclusively to the needs of the Indian Space Research Organisation (ISRO), the major consumer of titanium sponge in India today. KMML is of the view that the technology developed by DMRL is not cost-effective. Development of a titanium sponge industry in India is possible only if technology can be accessed. For this, a climate favourable to FDI will have to be created. Alternatively, R&D efforts in the country could be intensified for the development of indigenous technology.

World Ilmenite Reserves (2006)

India has 461.37 million tonnes of reserves of ilmenite accounting for 30.42% of the total world-wide reserves. Norway follows with 244 mt (16.13%), Canada (200; 13.22), Australia 180 11.90), South Africa (162 ,10.71), China (142, 9.39), USA (82.2, 5.42) Others (42, 2.81), Total (1512, 100)

POLICY ON BEACH SAND MINERALS

BSMs, counted amongst atomic minerals in the MMDR Act, are minerals found in the sands of the beaches along the 6000 km coastline of the country. Regional exploration has been carried out by the Atomic Minerals Directorate for Exploration and Research (AMD) over 2546 km, detailed exploration has been completed over 1000 km, and actual mining is carried out over 100 km. BSMs mainly include seven minerals that are of significance. Three of these are titanium bearing, viz. ilmenite, rutile, and leucoxene. The other four are zircon, monazite, garnet, and sillimanite.

Of these, ilmenite is commercially the most important mineral and constitutes about 65–70 per cent of the total beach sand deposits. Ilmenite yields titanium dioxide and titanium sponge for metal and alloys. Titanium dioxide is used mainly in pigments but also in ceramics, chemicals, papers and plastics, and pharmaceuticals. Almost 95 per cent of the worldwide use of titanium dioxide is for the production of white pigment. Titanium metal and alloys are the basic raw material for aircraft and aerospace and are increasingly being used in chemical industries, iron and steel industries, and Fast Moving Consumer Goods (FMCG) generally. Titanium is recognised as a strong metal of light weight, non-corrosive, and able to withstand temperature extremes (melting point of 1800 ºC). Titanium being as strong as steel and twice as strong as aluminium, its strength-to-weight ratio is superior to that of any other metal known today. In fact, titanium is often referred to as the metal of the future, and could even replace steel in the next 50 years.

Of the other four BSMs, viz. zircon, monazite, sillimanite, and garnet, only garnet is of great commercial significance. Regarding the other two, zircon is used in foundries, refractories, ceramics, glazed tiles, and white wares. Zirconium is obtained from zircon and is primarily used in nuclear reactors due to its resistance to corrosion and low absorption cross-section for thermal neutrons. Monazite is the primary source of thorium for the third stage of India’s nuclear programme. It also yields thorium nitrate, which is used in the gas mantle industry, thorium oxide which is used in fluorescent tubes and starters, and uranium oxide which is used exclusively for nuclear industries. Monazite is the only radioactive substance among BSMs. The monazite content of BSM ranges from 0.1 percent to 2 percent, with isolated patches up to 10 per cent. Background radiation levels where monazite is present are high and radiological hazards increase due to higher concentration of monazite after separation of other minerals.

It would be seen that out of the seven BSMs, two are atomic minerals, viz. zircon and monazite, and two minerals are of commercial importance, viz. ilmenite and garnet. Of the former, zircon has dual use and is of relatively lesser strategic importance. Compulsions of security drive the policy towards monazite and zircon and those of economics drive the policy towards ilmenite and garnet. While strategic considerations should guide the policy for mining zircon and monazite, commercial consid erations must prevail for determining the policy in respect of mining of ilmenite and garnet. However, it must be recognised that some titanium alloys are also of strategic importance in the aerospace and defence sectors.

Mining and separation of BSMs is essentially a simple process by which each mineral is separated from the sand with separators, taking advantage of the difference in their physical, electrical, and magnetic properties. However, when a particular mineral is separated from the sand it leaves behind tailings that contain the other minerals. Thus, if garnet is separated then the tailings will contain ilmenite, zircon, and/or monazite. If ilmenite is further separated the tailings will contain zircon and monazite. The problem lies in the dichotomy inherent in the need to exploit the commercially important minerals, on one hand, and the imperative to control the strategic minerals, on the other. Physically, access to one mineral entails access to all others. A complicated regulatory system is, therefore, put in place in respect of the tailings containing the strategic minerals that remain after the commercial minerals have been extracted. This is done by the Atomic Energy Regulation Board (AERB) and the AMD, and during the presentations on the subject, the complicated and severe procedures of AERB and AMD for licensing were cited as a distinct disincentive to beach sand mining. We return to this issue later (see paragraph 7.88).

EVOLUTION OF POLICY AND LAW ON BSM

The Atomic Energy Act, 1948 introduced the concept of ‘Prescribed Substances’, which referred to substances that could be used for the production or application of atomic energy or research. In 1953, the government notified the Atomic Energy (Control of Production and Use) Order, 1953, according to which no person could acquire, treat, possess, use, dispose of, export, or import any Prescribed Substance except under a licence. Ilmenite and zircon, which were earlier notified as Prescribed Substances, were again included as Scheduled minerals along with monazite and rutile. Also in 1953, another order known as Ilmenite (Control of Export) Order, 1953 was notified, by which export of ilmenite was put under a licensing regime, requiring further a certificate that the ilmenite to be exported did not contain more than 0.1 per cent of monazite (subsequently enhanced to 0.25 per cent). A new Atomic Energy Act was legislated in 1962, which expanded on the definition of Prescribed Substances as substances that may be used for the production or use of atomic energy or research into matters connected therewith and included uranium, plutonium,
thorium, beryllium, deuterium, or any of their respective derivatives or compounds or any other materials containing any of the aforesaid substances. Thereafter, in 1984, the government notified the Atomic Energy (Working of Mines, Minerals and Handling of Prescribed Substances) Rules, 1984. These rules provided that no person shall mine, mill, process, and/or handle any ore, mineral, or other material from which any one or more of the Prescribed Substances can be extracted, without obtaining a licence from the licensing authority and except in accordance with the terms and conditions of such licence. The DAE has since then been notifying the list of Prescribed Substances from time to time. The list of Prescribed Substances notified in 1995 included thorium with monazite, zirconium with zircon, and titanium ores with ilmenite, rutile, and leucoxene. This left out garnet and sillimanite among the BSMs that are major (non-Scheduled) minerals under the MCDR and out of the purview of the Atomic Energy Act and rules thereunder. However, since their tailings contain the Prescribed Substances, the separation process and disposal are regulated.

According to the IPR of 1956 and the Industrial Policy Statement of 1991, the activity of mining and separating BSMs was reserved for the public sector. However, keeping in view the liberalisation of the economy in the early 1990s and opening up of various hitherto reserved sectors to private investment, the DAE also formulated a new policy that was notified in October 1998. The policy was mainly driven by the realisation that despite India having large resources of BSMs, the production to reserve ratio (PRR) is the lowest in the world. The need for promoting a primary titanium industry was also keenly felt in view of the country having the largest estimated reserves of ilmenite in the world, and also on account of the strategic importance of the metal. The 1998 policy, therefore, permitted the entry of wholly Indian owned companies from the private sector in each of the three activities, viz. mining, mineral separation, and value addition. FDI was permitted in pure value addition projects (without mining and mineral separation) as well as in integrated projects comprising mining, mineral separation, and value addition, subject to certain conditions. As a result of this change, some private sector entities did enter the beach sand mining industry but the scale of operations and the total number of investors were far from significant.

A Conference on Beach Sand Mineral Policy organised by DAE in January 2005 for reviewing the working of the policy notified in October 1998 recommended that minerals like ilmenite, rutile, and zircon be removed from the list of Prescribed Substances for achieving the full potential through development of industries in this field. According to the provisions of the Atomic Energy (Working of Mines, Minerals and Handling of Prescribed Substances) Rules, 1984 read with the list of Prescribed Substances as notified in March 1995, it is necessary for all entities to obtain a licence from the DAE for undertaking any activity relating to those minerals that are notified as Prescribed Substances. At the conference, it was represented that four of the seven BSMs notified as Prescribed Substances (ilmenite, rutile, leucoxene, and zircon) can have many routine applications and the licensing procedures under the Atomic Energy Act as also the terms and conditions prescribed for concession holders were too severe and militated against investor confidence. It was also represented to the DAE that the 1995 list of Prescribed Substances was of generic nature and did not define threshold limits and specifications. As a result, universal control was being exercised for handling of any quantity of the Prescribed Substances, irrespective of their nuclear or strategic applications.

The DAE finally decided to revise the list of Prescribed Substances for three reasons :

first, to fall in line with international practices with respect to classification of material as source material, special fissionable material, and other material; second, to harmonise the list of Prescribed Substances with national export controls and the export control lists and guidelines of the Nuclear Suppliers Group (NSG) and the Missile Technology Control Regime and the consequential notification issued by the Directorate General of Foreign Trade (DGFT) amending the list of Special Chemicals, Organisms, Materials, Equipment and Technologies (SCOMET) as in Appendix 3 to Schedule 2 of ITC (HS) Classification of Export and Import Items, 2004–09; and third, some of the existing Prescribed Substances are found to be not directly related to nuclear energy while some others have come to be used in industries not related to nuclear energy. In the revised list of Prescribed Substances, four BSMs, viz. ilmenite, rutile, leucoxene, and zircon, will cease to be Prescribed Substances and will be outside the purview of the licensing requirement under the Atomic Energy (Working of Mines, Minerals and Handling of Prescribed Substances) Rules, 1984. However, handling and disposal of any radioactive material, arising from processing of BSMs or any other minerals having radioactivity attract the provisions of the Atomic Energy (Radiation Protection) Rules, 2004 and will continue to be subject to regulation by the AERB. Similarly, certification of export consignments of ilmenite by the AMD for its monazite content will continue.

On 18 January 2006, the DAE notified the new list of Prescribed Substances. Four BSMs, viz. ilmenite, rutile, leucoxene, and zircon, will cease to be Prescribed Substances from the date the MMDR Act is revised to fall in line with the new policy or from 1 January 2007, whichever is earlier. The MMDR Act contains the First Schedule, which is a list of specified minerals under Sections 4(3), 5(1), 7(2), and 8(2). The Schedule is divided into three Parts: A, B, and C. Part B contains a list of ‘Atomic Minerals’. This list corresponds to the list of Prescribed Substances under the Atomic Energy Act although the linkage is still to be formalised. Once the four minerals mentioned above are deleted from the list of Prescribed Substances, they will need to be deleted from Part B of the First Schedule as well. The DAE proposed that three of the four minerals, viz. ilmenite, rutile, and leucoxene, should be shifted from Part B to Part C of the First Schedule, which means that they will not be atomic minerals any longer but will be treated as Scheduled major minerals, for which the approval of the Ministry of Mines is required while granting concessions. The DAE also proposed that the fourth mineral, viz. zircon, should continue to be categorised as an atomic mineral under the MMDR Act even though it is removed from the list of Prescribed Substances under the Atomic Energy Act. The implication is that mining concessions for zircon will be granted only on the recommendation of the DAE. The DAE further recommends that the policy of granting concessions in respect of ilmenite should continue to be restrictive in that only Indian companies should be allowed to mine ilmenite and foreign companies should not be allowed to mine ilmenite unless they also agree to add value. The DAE would like to see a titanium industry established in India so that titanium dioxide and titanium sponge start getting produced in the country. The technology for making titanium is stated to be closely held and the thinking is that the raw material, viz. ilmenite, should be used to bring that
technology to India.