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New Delhi
Posted on : Aug 25, 2008
mining companies may forge multiple joint ventures with domestic partners
without seeking government’s prior approval. The government is amending foreign
direct investment (FDI) regulations to boost investment by global mining firms
such as Rio Tinto, De Beers, BHP Billiton and Vale.

Today, foreign firms interested in joint ventures with domestic firms are
required to give a mandatory declaration to the government that they don’t have
another JV in the country. In the mining sector, foreign companies do not
require to take foreign investment promotion board’s (FIPB) clearance as
stipulated in the Press Note 1. However, a declaration is mandatory.

Under the proposed change, the department of industrial policy & promotion (Dipp)
is planning to scrap the rule, allowing foreign miners form multiple JVs for the
same mineral, an official source said. A note to this effect is expected to come
up for Cabinet approval soon.

“Mines are scattered across the country and foreign companies are located in
different locations. The companies are engaged in the same line of mineral
business in more than one location. Hence, there is need to allow them carry out
multiple businesses seamlessly by removing the clause.

FDI in mining comes through the automatic route and there is no reason for
holding back proposals for such declarations,” a mines ministry official said.
However, permission for FDI in the sector has to be in line with the Mines &
Minerals (Development & Regulation) Act (MMDR), 1957.

The government has placed 100% FDI in exploration and mining of diamonds and
precious stones on the automatic route, but subjected clearances to MMDR Act and
self-declaration about ‘no existing joint venture’ in the same field.

Similar is the case with coal and lignite mining for captive consumption.
Restrictions have slowed FDI in the mining sector that reached a level of $510
million during 2000-07, which is less than 1% of total FDI inflows till 2007.

Several multinational mining companies and smaller players in the field of
prospecting have demanded scrapping of the self-declaration as this was causing
unnecessary delay in carrying out expansion plans. In fact, none of the overseas
mining companies have announced big investment plans in the country.

The changes would also clear decks for Rio Tinto to have multiple Indian
companies as JV partners in different projects. The company has a joint venture
with Orissa Mining Corp and is considering a similar joint venture with NMDC
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