Source: Maurice Jackson for Streetwise Reports 05/17/2018
Jayant Bhandari, host of the “Capitalism and Morality” seminar, discusses with Maurice Jackson of Proven and Probable the state of mining in India, as well as some mining companies that offer arbitrage opportunities.
Maurice Jackson: Joining us is Jayant Bhandari, the host of the highly acclaimed “Capitalism and Morality” seminar and a prominent, sought-out advisor to institutional investors. Today, we will discuss the mining industry in India and arbitrage opportunities.
Let’s begin our discussion in India. There are some new reform laws taking place in the mining industry that could really have a significant impact on India. For those that may not be familiar with India and its natural resources, can you share what India produces and how it has been extracting those resources historically?
Jayant Bhandari: India produces about 40,000 ounces of gold and should be able to produce a lot more ounces of gold in that country, but the problem is no one cares to explore for gold in that country. This is mostly because the land rights are not properly defined, and the bureaucratic procedure to get from reconnaissance permit to mining permit is virtually impossible. It takes a huge amount of time, and at every step in the process the bureaucrat has the right to take away the project from you. So you might invest hundreds of millions of dollars on these projects, but at the end of the day, the government might just take that project away from you. That is the very reason why the Indian mining industry is extremely backward.
Coal mining is a monopoly run by the government of India. Iron mining takes place in a very confined space in that country in which private operators operate iron mining as a part of the steel industry. In virtually every case, these companies are in bed with the government in a corrupt way, and they are in bed with the mafia. When you have corrupt regulations, you also empower mafia kind of organizations to come in and exist, who then exploit the local people.
So Indian mining industry is almost an impossible industry. You might be able to operate that as a mafia-run industry, but even then Indian companies prefer to own coal mines and iron mines in Brazil, Africa, Indonesia, Papua New Guinea or Australia. They prefer not to operate in India not only because of the cost, but also because the bureaucratic regulations are very difficult or impossible, plus land rights are very difficult obtain, and on top of that, costs of making mining happen in that country is extraordinarily high.
Maurice: For someone not familiar with India, are the mines there nationalized, and if so, what changes is India trying to implement to change this course?
Jayant: Coal India is a nationalized company. It is run by the government of India. It is listed on the stock exchange, …read more
Source:: The Gold Report