Mining in Emerging Economies

Sharing the Spoils

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| Mining in Emerging Economies - Sharing the Spoils

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Mining in Emerging Economies - Sharing the Spoils |

| Mining in Emerging Economies - Sharing the Spoils

)&

Global mining overview

Volatile and uncertain

scenario
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Exhibit 1: Roller coaster ride (2008-2013)
Two periods
of correction

14
12
10
8

10

7.8

2
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Exhibit 2: real GDP growth rate (in %)

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8.2

7.8

7.5

6
2006 2007 2008 2009 2010 2011 2012 2013E 2014E

-4

-6

0
World

China

The US

Euro area

India

Source: IMF World Economic Outlook

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2013E
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China

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Source: IHS Global Insight

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Mining in Emerging Economies - Sharing the Spoils |

Exhibit 3: Manufacturing PMI (China)

Month
2013

Headline

Outputs

New
orders

New
export
orders

Exhibit 4: Global demand of select commodities (Rebased

2007= 100)
125
120
115

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85

Global Research, 24 July 2013

80

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2008

2009

2010

2011

2012

2013E

Iron ore demand (world)

Thermal coal trade

Steel demand

Copper demand

Source: NORTH AMERICAN IRON ORE - INITIATING COVERAGE, Credit Suisse, 1

December 2011; Iron ore Chartbook, Morgan Stanley, 7 July 2013; Higher
coal/iron ore price scenario, ABN Amro, 7 March 2008 (2007 price); The
Dg\]klgf]2Kl]]dYf\ajgfgj]hja[]k[gflafm]lgjemh$BHEgj_Yf$**Bmdq
2013; World steel association;

Exhibit 5: Commodity price trends for iron ore, steel, coal,

copper (Rebased 2007= 100)
200

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140

Economic slowdown loomed

heavy

2007

160
120
100
80
60
40
20
0

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| Mining in Emerging Economies - Sharing the Spoils

2007

2008

2009

Iron ore prices

Steel prices (HRC)

2010

2011

2012

2013E

Thermal coal prices

Copper prices

Source: NORTH AMERICAN IRON ORE - INITIATING COVERAGE, Credit Suisse, 1

December 2011; Iron ore Chartbook, Morgan Stanley, 7 July 2013; Higher
coal/iron ore price scenario, ABN Amro, 7 March 2008 (2007 price); The
Dg\]klgf]2Kl]]dYf\ajgfgj]hja[]k[gflafm]lgjemh$BHEgj_Yf$**Bmdq
2013; World steel association;

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*@)*$kYn]\MK)&1Zaddagfaf[gklkafYfYll]ehllgYjj]kl[gkl
afYlagf&L`][gehYfqYdkg\]dYq]\l`]Gdqeha[<Yehjgb][l$
[alaf_\a^[mdleYjc]l[gf\alagfk&Km[`\]dYqkYf\[Yf[]ddYlagfk
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Mining in Emerging Economies - Sharing the Spoils |

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Yf\afn]klgjkk`gjl%l]jej]lmjf`gjargf&Afl`][Yk]g^bmfagj
eafaf_[gehYfa]k$l`]dY[cg^Y[[]kklg[YhalYdak`mjlaf_l`]aj
]fl]jhjak]nYdm]kYf\ak]n]fhmk`af_kge]lgoYj\afkgdn]f[q&
L`]af\mkljq`YkYdkgoalf]kk]\l`]dYj_]klfmeZ]jg^`a_`%
hjgd];=G]palkoal`afYk`gjlkhYf&

Exhibit 6: mining indices vs broader indices

(rebased 2007=100)
115
110
105
100
95
90
85

Mining stocks
sharply
underperformed

Mining stocks
rebounded on
account of
k[Yde]Ykmj]k

80
2007 2008 2009
FTSE All Share mining

Capital raising and

investments

Mining indices
underperformed

2010 2011 2012 2013

S&P/ASX 300 Metal & mining

Dow Jones Industrial Average

Source: Thomson DataStream

Km[`eY[jg][gfgea[^Y[lgjk`Yn]Zjgm_`lYZgmlYfaehY[l
gfl`]ZjgY\]jeYjc]lkYf\gfeafaf_klg[ck$afhYjla[mdYj&
;geeg\ala]khja[]k`Yn]Z]]fYc]q\jan]jg^k`Yj]hja[]
h]j^gjeYf[]kaf[]*((+&@a_`hja[]k Yf\j]lmjfk!af*((.(/
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af[geeg\alqhja[]k$j]kmdlaf_afo]Ych]j^gjeYf[]g^e]lYd
k][lgjaf\a[]k&

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e]Ykmj]klg[gmfl]jl`]\oaf\daf_\]eYf\&L`ak[j]Yl]\
_jgol`ghhgjlmfala]k^gjl`]j]Yd]klYl]Yf\[gfkljm[lagf
k][lgj&L`]j]f]o]\afl]j]klafdYl]*((1Yf\)@*()($\m]
lgaehjgnaf_afn]klgjk]flae]fl$j]kmdl]\afhmddZY[cjYddqaf
e]lYdaf\a[]k&@go]n]j$l`afeYj_afkYf\af[j]Yk]\mf[]jlYaflq
Yjgmf\l`]kmklYafYZadalqg^l`]j][gn]jqkaf[]l`]f`Ykj]kmdl]\
afYngdYlad]h]j^gjeYf[]Y[jgkkeafaf_af\a[]k&L`]afn]kle]fl
[daeYl]`Yk\]l]jagjYl]\$Yf\Y[[]kklg]flj]hj]f]mjaYd[YhalYd
`Yk_]f]jYddqogjk]f]\^gjl`]k][lgjafl`]dYkl[gmhd]g^
q]Yjk$YkeYqZ]gZk]jn]\Z]dgo&
=p`aZal/2;YhalYdjYakaf_^jgenYjagmkjgml]k MKeaddagf!

2007

2008

2009

2010

2011

2012

AHG

*)&,((

)*&,(.

*$10/

)/$1,0

)/$,,1

)$+00

>gddgogf

..$0(*

,0$/-)

/+$0(.

,1$/(-

,1$/,-

*-$1-(

;gfn]jlaZd]

)*$0.-

)*$*+0

),$,+)

-&,//

*$+.-

+$-+/

:gf\k

+.$+0-

+0$),.

.)$().

/*$-(*

0+$0(,

)$)*$-+1

dgYfk

)$)($/0/

)$/)$.1)

.*$,*(

)$0+$0/-

)$0/$(-1

)$(-$10)

LglYd

*&,0$*)*

*$0+$*+*

*$),$..(

+$*1$-(/

+$,($,**

*$,1$+1,

Source: EY Research

| Mining in Emerging Economies - Sharing the Spoils

*High volume and

large-scale issues

600
500
400

25

300

20

250

200

100
2007

IPO
Loans

2008
2009
2010
2011
Follow ons
Convertible Bonds
total

2012
Bonds

<mjaf_*()($[geeg\alqhja[]kaf[j]Yk]\_dgZYddq$ljYfkdYlaf_
aflg`a_`]jj]YdarYlagfkYf\ghhgjlmfala]k^gj_j]Yl]jY[[]kk
lg[YhalYd&EYbgjhjg\m[]jko]j]YZd]lgY[[]kk[YhalYdoal`
j]dYlan]]Yk]Yf\kgmj[]fYf[]Yldgo]jYn]jY_]Zgjjgoaf_
[gklkYf\dgf_]jl]fgjk&9keYfq_gn]jfe]flkkljan]\lg
eYaflYafdgoafl]j]kljYl]k$afn]kle]fl%_jY\]eYbgjkZ]f]l]\
^jgemfaim]ghhgjlmfala]k^gjdgo%[gklZgjjgoaf_naYZgf\
Yf\dgYfeYjc]lk&9j][gj\MK0,Zaddagfg^[gjhgjYl]Zgf\k
o]j]akkm]\Yf\MK)0/Zaddagfg^ZYfcdgYfko]j]Zgjjgo]\
\mjaf_l`]q]Yj&L`akdgo%afl]j]kljYl]]fnajgfe]fld]\lgYf
af[j]Yk]af\]eYf\^jgeafn]klgjk^gj`a_`%qa]d\af_afn]kle]fl
ghhgjlmfala]k&L`akgh]f]\mhl`]`a_`%qa]d\eYjc]llgY
fmeZ]jg^ea\%la]j\]n]dgh]jkoal`kmZ%afn]kle]fl_jY\]
[j]\aljYlaf_kYfaehgjlYfl\]n]dghe]fl^gjl`]af\mkljql`Yl
^Y[adalYl]\\]YdY[lanalqYll`]ea\%la]jd]n]d&F]n]jl`]d]kk$hgkl
l`Yl$\m]lg[`Ydd]f_af_eYjc]l[gf\alagfk$l`]AHG[`Yff]d
Zgj]l`]Zjmfl$oal`hjg[]]\k ]p[dm\af_AHGg^?d]f[gj]!\gof
-1gf*()(Yf\Yj][gj\fmeZ]jg^AHGkZ]af_hgklhgf]\
Yf\j]eYafaf_jedqafl`]hah]daf]&

100
50
2007

2008
2009
Proceeds

2010

2011
2012
Number

Source: EY Research

Exhibit 10: Bond volume and proceeds

120
Proeeds $billion

Source: EY Research

"@a_`ngdme]Yf\dYj_]%k[Yd]akkm]k2L`]*()(_jgol`oYkl`]
[geZaf]\]^^][lg^Ykljgf_q]Yj^gjAHGk_]f]jYddq ngdme]oYk
Ylalk`a_`]klYf\YfmeZ]jg^j]dYlan]dqdYj_]%k[Yd]akkm]k2;gYd
Af\aY+&-Z3M;JmkYd*&*Z3NYddYj)&)Z39^ja[Yf:Yjja[c?gd\
(&1Z3Egf_gdaYfEafaf_;gjh(&/Z!

150

10

300

100

200

15

Number of IPOs

Proeeds $billion

700

Exhibit 9: IPOs volume and proceeds

100
80
60
40
20
0

2007

2008 2009
Proceeds

2010

2011 2012
Number

200
180
160
140
120
100
80
60
40
20
0

Number of bond issues

Exhibit 8: Capital raising (Rebased 2007=100; comparison)

Source: EY Research

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Mining in Emerging Economies - Sharing the Spoils |

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k`gjl]jl]fgjk d]kkl`Yfn]q]Yjk!Yf\af[dm\af_gYlaf_jYl]
ljYf[`]k$j]hgjl]\dqlgY[[geeg\Yl][`Yf_]\\]eYf\^jge
))
afn]klgjko`go]j]c]]flgYnga\Z]af_dg[c]\aflgdgojYl]k &
>gjbmfagjk$`go]n]j$l`]oal`\jYoYdg^]imalq[YhalYd`Yk
j]kmdl]\afaf[j]Yk]\\a^[mdlqafY[[]kkaf_Yf\jYakaf_[YhalYd&
=QkEafaf_=q]af\]p$o`a[`ljY[ck9AE%dakl]\bmfagjeaf]jk$
[gflafm]\alkkl]]h\gofoYj\ljYb][lgjq$dgkaf_*)gn]j*I)+
Yf\+,kaf[]l`]klYjlg^*()+&Mf^gjlmfYl]dq$eYfqbmfagjk
Yj]kljm__daf_lgjYak]Yfq]imalqYlYdd&=imalqhjg[]]\k ^jge
^gddgo%gfakkm]k$Ykl`]j]o]j]fgAHGk!`Yn]^Ydd]flgYfgl`]j
j][gj\dgoYlMK00e nk&MK11eaf)I)+Yf\MK)-*e

)) JagLaflgkmjhjak]kMK`a_`%_jY\]eYjc]loal`-%hYjl\]Yd$J]ml]jk$),Bmf]
*()+
0

| Mining in Emerging Economies - Sharing the Spoils

)*

af*I)*!& L`aklj]f\`YkZ]]fj]][l]\Y[jgkk_dgZYdeafaf_
]imalqeYjc]lk&
@go]n]j$l`]af\]pYf\[YhalYd%jYakaf_lj]f\k[d]Yjdqaf\a[Yl]
l`]egn]e]flg^[YhalYdlgoYj\Ykk]lkaf]e]j_af_Yf\
\]n]dghaf_[gmflja]k&
=p`aZal))2Lgh^mf\jYakaf_Zqbmfagjeaf]jkgfDK=%9AE
(2012)
Total
proceeds
$m*

Focus of
activity

Company

Type

9^ja[Yf
Eaf]jYdk

;j]\al^Y[adala]k3
[gfn]jlaZd]Zgf\k3
kljYl]_a[]imalq

Dgf\gf
Eafaf_

=imalq3jgqYdlq
fYf[af_

*(( Iron ore in

Ka]jjYD]gf]

;gYdg^
9^ja[Y

;j]\al^Y[adala]k3
kljYl]_a[]imalq

)-0 ;gYdafKgml`
9^ja[Y

CajcdYf\
DYc]

?gd\[gfn]jlaZd]
Zgf\k

)*/ ?gd\af;YfY\Y

K`YflY
?gd\

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[gfn]jlaZd]Zgf\k3
]imalq

)*( ?gd\af
LYfrYfaY

Kajamk
Eaf]jYdk

=imalq

0/ HglYk`afl`]
MC

HYf
9^ja[Yf
J]kgmj[]k

Ja_`lkakkm]
Y[imakalagf
^mf\af_!

0) ?gd\afKgml`
9^ja[Y

9mj]mk
Eafaf_

=imalq

/1 ?gd\afDaZ]jaY
Yf\;Ye]jggf

9eYjY
Eafaf_

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]imalq

-- ?gd\af
:mjcafY>Ykg$
Ka]jjYD]gf]
Yf\;l]
\Angaj]

Eaf]jY
AJD

=imalq

33 ?gd\afH]jm
Yf\9j_]flafY

*$0-* Iron ore in

Ka]jjYD]gf]

Source: Mining Eye Q42012, EY (Yearly average pound ()-dollar ($) conversion
^gj*()*5)&-0,/3_mj]kjgmf\]\%g^^!

>mf\k`Yn]Z]]f\aj][l]\lgoYj\^jgfla]jkeYjc]lkkm[`Yk
9^ja[Yf[gmflja]k Ka]jjYD]gf]$LYfrYfaY$DaZ]jaY$;Ye]jggf$
]l[&!&E]Yfo`ad]$\]n]dghaf_eYjc]lkkm[`YkKgml`9^ja[Y$
H]jmYf\9j_]flafY`Yn]YdkgYlljY[l]\gok&Af*())$0/
)* 9n]jY_]]p[`Yf_]Hgmf\%\gddYj]p[`Yf_]jYl]\mjaf_l`]imYjl]j2I**()*2
)&-0+)3I)*()+2)&--++3I**()+2)&-+-.!

\]Ydko]j]afc]\lYj_]laf_Ykk]lkaf+(^jgfla]jfYlagfkoal`Y
lglYdnYdm]g^MK*(&*Zaddagf&L`]hj]^]jj]\\]klafYlagfko]j]
RYeZaY$EgrYeZaim]Yf\Egf_gdaY$lg_]l`]jYlljY[laf_l`j]]
imYjl]jkg^l`akafn]kle]fl&;gehYfa]k^jge;YfY\YYf\l`]
MCo]j]Zq^Yjl`]egklY[lan]Y[imaj]jkafl`]k]fYlagfkaf
*())&9^ja[YYf\Egf_gdaYYj]Ydkg]klYZdak`af_l`]ek]dn]k
YkdYj_]%k[Yd]eaf]jYdafn]kle]flk&Afl`][Yk]g^9^ja[Y$o`ad]
j]kgmj[]fYlagfYdake[gflafm]klgZ]YZa_akkm]^gjafn]klgjk$
o]gZk]jn]eYfq^jgfla]j[gmflja]kj]nakalaf_jgqYdla]kYf\lYp
j]_ae]klgYlljY[l^gj]a_fafn]klgjk&
9eafaf_ZggeafEgf_gdaYak]ph][l]\lgmf\]jhaf][gfgea[
_jgol`g^*+af*()+&AfBmf]*())$Egf_gdaYkmjhYkk]\
9mkljYdaYYkl`]c]qk]dd]jg^[gcaf_[gYdlg;`afY&Deal values
=p`aZal)*2;`Yf_]af_dgZYdk`Yj]g^\]YdkZqnYdm] *()*
gn]j*())!
Country
9^ja[Y
DYlaf9e]ja[Y

Change in global
share by value (%)

Change in global
share by volume (%)

/-

0-&/

),&+

%+/&-

%),

;`afY

)++

33

MK

%//

%.0&0

9mkljYdaY
;YfY\Y

JmkkaY
Source: EY research

;d]Yjdq$]e]j_af_Yf\\]n]dghaf_[gmflja]k$Yf\j]_agfkkm[`
Yk;`afY$9^ja[YYf\DYlaf9e]ja[Yaf[j]Yk]\l`]ajk`Yj]
g^_dgZYd\]Ydkafl`]eafaf_Yf\e]lYdkk][lgj&E]Yfo`ad]$
\]n]dgh]\[gmflja]kkm[`Yk9mkljYdaY$;YfY\YYf\l`]MK
oalf]kk]\Y^Yddafl`]aj_dgZYdk`Yj]g^\]Ydkafl`]k][lgj
\mjaf_*()*YkY_Yafkl*())&
>mf\kYj]]ph][l]\lgZ]af[j]Ykaf_dq\aj][l]\lgoYj\
\]n]dghaf_Yf\]e]j_af_[gmflja]k$YkimYdalqj]kgmj[]kaf
\]n]dgh]\[gmflja]kYj]\]hd]laf_$o`ad]l`gk]af\]n]dghaf_
Yf\^jgfla]jeYjc]lkg^^]j_jgol`ghhgjlmfala]koal`_gg\
imYdalqj]kgmj[]k&

Mining in Emerging Economies - Sharing the Spoils |

)( | Mining in Emerging Economies - Sharing the Spoils

*&

Emerging Economies: future growth

engine for the mining industry

Source: United States Geological Survey

Exhibit 15: Gold production - 10-year CAGR

400

150

Uzbekistan

Indonesia

Peru

South Africa

Mexico

Russia

China

United States

Canada

Ukraine

South Africa

Russia

India

450
400
350
300
250
200
150
100
50
0

Brazil

Exhibit 16: Iron ore production - 10-year CAGR

million tons

Suriname

Venezuela

Kazakhstan

Russia

Jamaica

Guinea

India

Brazil

)+ L`]jak]g^]e]j_af_hdYq]jkaf_dgZYdeafaf_2\jan]jkYf\^mlmj][`Ydd]f_]k$
BYfmYjq*())$HjghYj[gkhjanYl]k][lgj\]n]dghe]fleY_Yraf]
), GhhgjlmfalqYljakc$K]hl]eZ]j*()*$HgjlBY[ckgfHYjlf]jk

-10%

Source: United States Geological Survey

-5.0%

Source: United States Geological Survey

Australia

0.0%
China

-5%

50

China

20

0%

100

Sweden

5.0%

5%

200

Canada

10.0%

40

10%

250

United States

15.0%

Australia

million tons

60

15%

300

Exhibit 13: Bauxite production - 10-year CAGR

20.0%

20%

350

L`][`YjlkZ]dgoj]n]Ydl`]hjg\m[lagfg^kge]g^l`]eYbgj
[geeg\ala]kZql`]lgh)(hjg\m[]jkaf*()*Yf\l`]YffmYd
_jgol`afl`]hjg\m[lagfg^l`]j]kh][lan]eaf]jYdkafl`]dYkl
)(q]Yjk&

80

Indonesia

-20%

Zambia

-10%

Russia

1,000
Peru

0%

China

10%

2,000

Congo (Kinshasa)

20%

3,000

Chile

30%

4,000

Canada

5,000

Australia

40%

United States

6,000

Australia

=e]j_af_][gfgea]kk`Yj]afeaf]jYdkmhhdq`Ykaf[j]Yk]\
Yll`][gklg^kmhhdq^jge\]n]dgh]\][gfgea]k&>gj]pYehd]$
\mjaf_)1.(*((($9mkljYdaY_Yaf]\Y+0eYjc]lk`Yj]af
ZYmpal]Yf\Yjgmf\)-afmjYfame$ajgfgj]Yf\fa[c]d&Al
Ydkg_Yaf]\eYjc]lk`Yj]afYfmeZ]jg^gl`]j[geeg\ala]k
km[`Yk_gd\$[gYdYf\[ghh]j&@go]n]j$\mjaf_*(((*()($
o`ad]_dgZYdhjg\m[lagfg^l`]k]eaf]jYdk_j]o$9mkljYdaYk
eYjc]lk`Yj]g^hjg\m[lagf]al`]j\][daf]\gjj]eYaf]\f]Yjdq
),
klY_fYfl &

kt

G^]imYdka_fa[Yf[]akl`][gfljaZmlagfg^l`]k]][gfgea]klg
l`]_dgZYdkmhhdqg^nYjagmkeaf]jYdk&?jgol`g^_dgZYdeaf]jYd
kmhhdq^jge]e]j_af_][gfgea]k`Yk^Yjgmlo]a_`]\l`]kmhhdq
^jgeY\nYf[]\][gfgea]k&Kaf[]l`]Z]_affaf_g^l`]dYkl
\][Y\]$]e]j_af_][gfgea]k`Yn]Y[[gmfl]\^gjegklg^l`]
_jgol`afl`]_dgZYdhjg\m[lagfg^eaf]jYdkkm[`Ykajgfgj]
Yf\fa[c]d&L`]q`Yn]]^^][lan]dqY[[gmfl]\^gjYddg^l`]_dgZYd
hjg\m[lagf_jgol`g^Ydmeafame$[ghh]jYf\kl]]d\mjaf_l`ak
)+
h]jag\ &

Exhibit 14: Copper production - 10-year CAGR

tons

=e]j_af_eYjc]lk`Yn]hdYq]\Yka_fa[Yfljgd]afl`]_dgZYd
eafaf_Yf\e]lYdkk][lgj$hYjla[mdYjdqkaf[]l`]dYkl\][Y\]&L`]
eaf]jYdhja[]Zggeafl`]dYkl\][Y\] egklkh][a[Yddq\mjaf_
*((+(0!oYkhjaeYjadq\m]lg_dgZYd\]eYf\^gjeaf]jYdk
^jgel`]k]]e]j_af_][gfgea]k&

20%
18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

Source: United States Geological Survey

Mining in Emerging Economies - Sharing the Spoils | ))

L`][`Yjlkj]n]Ydl`Yl[gmflja]k^jge]e]j_af_eYjc]lkYj]
l`]c]qhjg\m[]jkg^YjYf_]g^[geeg\ala]kkm[`Yk[ghh]j
;`ad]!$ajgfgj] ;`afY!$kadn]j H]jm!$hdYlafme Kgml`9^ja[Y!
Yf\\aYegf\k :glkoYfY!&L`][`YjlkYdkg[d]Yjdqj]][ll`Yl
]e]j_af_[gmflja]k`Yn]kl]hh]\aflgaf[j]e]flYddqe]]ll`]
_jgoaf__dgZYd\]eYf\^gjeaf]jYdkYf\afl`]hjg[]kk_Yaf]\
af[j]Ykaf_eYjc]lk`Yj]af_dgZYdeaf]jYdkljY\]&

Exploration trends
Lge]]ljakaf__dgZYd\]eYf\^gjeaf]jYdkYf\`]f[]lg]phYf\
l`]ajj]k]jn]ZYk]$]e]j_af_][gfgea]k`Yn]oalf]kk]\
af[j]e]flYdkh]f\gf]phdgjYlagfafl`]dYkl\][Y\]&L`mk
]e]j_af_][gfgea]kk`Yj]g^]phdgjYlagf]ph]f\almj]`Yk
af[j]Yk]\^jgeYjgmf\,(Yll`]Z]_affaf_g^l`]\][Y\]lg
Yjgmf\.(afj][]flq]Yjk&
?jgol`af]phdgjYlagf]ph]f\almj]km__]klkl`Yl]e]j_af_
eYjc]lkj]eYafl`]^g[mkg^eafaf_[gehYfa]k^gjf]of\k&
AlYdkgaf\a[Yl]kl`]lj]f\g^^mlmj]hjg\m[lagf$l`gm_`l`]
km[[]kkjYl]afl]jekg^\ak[gn]jqg^dYj_]eaf]kkladdj]eYafk
n]jqdgo&9kh]jl`];gdgjY\gK[`ggdg^Eaf]k$allYc]k-((
)$(((_jYkkjgglk]phdgjYlagfhjgb][lklga\]fla^q)((lYj_]lk
^gjY\nYf[]\]phdgjYlagf&G^l`]k]$)(lmjfaflg\]n]dghe]fl
)hjgb][lkYf\gfdq)Z][ge]kYhjglYZd]eaf]&

Latin America and Africa take

the lions share
).

Af*()*$DYlaf9e]ja[YoYkl`]egklhghmdYj_dgZYd]phdgjYlagf
kh]f\af_\]klafYlagf$Y[[gmflaf_^gjY*-k`Yj]$egkldq
lYj_]l]\lgoYj\_gd\]phdgjYlagf&:Yk]e]lYdk]phdgjYlagf
kh]f\j]hgjl]\l`]keYdd]klk`Yj]kaf[]l`]dYl])11(k&DYlaf
9e]ja[Yf[gmflja]kl`YlYlljY[l]\l`]eYpaemekh]f\af_o]j]
E]pa[g$;`ad]$H]jm$:jYrad$9j_]flafYYf\;gdgeZaY&
9^ja[Ykk`Yj]g^_dgZYd]phdgjYlagfkh]f\af_jgk]lg)/$
eYcaf_all`]k][gf\%egklhj]^]jj]\\]klafYlagf^gj]phdgjYlagf
af*()*$mh^jgealkl`aj\hgkalagfdYklq]Yj&L`]j]_agfkYo
l`]k][gf\%dYj_]klaf[j]Yk]af]phdgjYlagfkh]f\af_afZgl`
h]j[]flY_]Yf\\gddYjl]jek&9kakl`][Yk]oal`DYlaf9e]ja[Y$
_gd\YlljY[l]\l`]dYj_]kl\gddYjaf[j]Yk]af]phdgjYlagfkh]f\
Yddg[Ylagf&Af[gfljYkl$]phdgjYlagf]ph]f\almj]Yddg[Yl]\^gj
\aYegf\k^]dd^gjl`]kapl`[gfk][mlan]q]Yj&>gjgl`]jlYj_]lk$
hdYff]\]ph]f\almj]af[j]Yk]\\mjaf_l`]q]Yj&L`]<]eg[jYla[
J]hmZda[g^;gf_goYkl`]egklhj]^]jj]\\]klafYlagf^gj
)- KmZeakkagflgl`]hjg\m[lanalq[geeakkagfeaf]jYdYf\]f]j_qj]kgmj[]
]phdgjYlagfafimajq$EYj[`*()+$Eaf]jYd;gmf[adg^9mkljYdaY
). Ogjd\oa\]]phdgjYlagflj]f\k*()+$E]lYdk=[gfgea[k?jgmh

)* | Mining in Emerging Economies - Sharing the Spoils

]phdgjYlagfkh]f\af_af9^ja[Y^gjl`]k][gf\lae]afl`]hYkl
l`j]]q]Yjk&
9egf_gl`]j]e]j_af_eYjc]l][gfgea]k$;`afYYf\
JmkkaY$Ydgf_oal`Egf_gdaY$CYrYc`klYf$>afdYf\Yf\Lmjc]q$
Y[[gmfl]\^gjl`]^gmjl`%dYj_]klZm\_]lk`Yj]&L`]^g[mkg^
]phdgjYlagfafl`]k]][gfgea]koYkfglgf_gd\$YkoYkk]]f
]Yjda]j$ZmlgfZYk]e]lYdkkm[`Yk[ghh]jYf\fa[c]d af;`afY$
Egf_gdaY$JmkkaYYf\CYrYc`klYf!&
9egf_gl`]jeYbgjeafaf_j]_agfk$;YfY\Y Y[[gmflaf_^gj
).g^l`]lglYd_dgZYdZm\_]l!^]dd^jgealkk][gf\hgkalagflg
l`]l`aj\af*()*&9mkljYdaYY[[gmfl]\^gje]j]dqYZgml)*g^
_dgZYd]phdgjYlagf]ph]f\almj]$\gof^jge)+af*())&

Exhibit17: Top destinations for non-ferrous exploration, 2012

Russia
3%
16%
Canada
Europe
United States

FSU/
Mongolia

4%

3%

8%
4%

Mexico

China

6%

West
Africa

Colombia
Peru

7%

2%

6%
3%

5%

Chile

Brazil

9%

Sub-Saharan
Africa

5%
3%

Pacic
Islands

12%

Australia
Argentina

Source: Metals Economics Group, World Exploration Trends 2013

M&A trend in emerging

economies
=e]j_af_eYjc]lk`Yn]Y[[gmfl]\^gjYka_fa[Yflhgjlagfg^
afZgmf\E9\]Ydkafeafaf_Yf\e]lYdk$Ykk`gofafl`][`Yjl
Z]dgo$oal`l`]k`Yj]g^E9\]YdklYj_]laf_Ykk]lkaf]e]j_af_
][gfgea]kjakaf_\mjaf_*((/*()*&
9^ja[Y`Y\Y[[gmfl]\^gjYe]Y_j]+g^E9\]Ydkaf*((/$
Yf\alk`Yj]bmeh]\lg)1Zq*()*&KaeadYjdq$DYlaf9e]ja[Yk
k`Yj]o]flmh^jgeYZgml0af*((/lg)+Zq*()*&

Exhibit 18: Percentage deals by target region (200712)

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

2007

2008

Europe

North America

Africa

Asia Pacic

2009

2010

Middle East

CIS

2011

2012

Latin America

Source: EY research

Af*()*$[gehYfa]ko]j]oYjqg^`a_`%jakc[gmflja]k$Ykkm[`
\]YdkYhh]Yj]\lgZ]`Yj\]jlgbmkla^qYea\_j]Yl]jk`Yj]`gd\]j
k[jmlafqgf[YhalYdYddg[Ylagf&E=Y[lanalqY[jgkk^jgfla]j
j]_agfk$YkYj]kmdl$l]f\]\lgZ][gf\m[l]\Zq;`af]k]KG=k
^gjj]kgmj[]k][mjalq&>jgfla]jeYjc]lk`gd\l`]hjgeak]g^
jgZmkl\]eYf\$ZYk]\gfYf]e]j_af_ea\\d][dYkk$Yf\Yj]
Ydkg`ge]lgla]jgf]eaf]jYdYkk]lk&;geh]lalagf`Yk_j]Yldq
afl]fka]\$hYjla[mdYjdqYegf_:JA;Yf\]e]j_af_eYjc]l

Mining in Emerging Economies - Sharing the Spoils | )+

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;gf_g <J;!$Ka]jjYD]gf]Yf\FYeaZaY^gddgo]\Kgml`9^ja[Y
Ykl`]d]Y\af_9^ja[Yf\]klafYlagfkYf\o]j]hjaeYjadqlYj_]l]\
Zq;`af]k]KG=k^gj[ghh]j$ajgfgj]Yf\mjYfame$j]kh][lan]dq&

=phdgjYlagf$hjg\m[lagfYf\E9lj]f\k[d]Yjdqj]n]Ydl`Yll`]
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[geemfalqghhgkalagflgeafaf_$dYj_][YhalYd[gklZdgogmlk$
oYl]jYf\]f]j_q[gfkljYaflk$Yf\_jgoaf_hjgl][lagfake
Y[jgkkl`]j]_agf&

Major factors shifting mining

to emerging economies

Af[j]Ykaf_\]eYf\^gjjYoeYl]jaYdkafl`]9kaY%HY[a[j]_agf
\jgn]9kaYfY[imaj]jkgn]jk]Yklgk][mj]kmhhdq$oal`;`afY
Yf\BYhYf]e]j_af_Ykl`]egklY[imakalan][gmflja]kaf*()*&
9kaYfKG=kYf\ljY\af_`gmk]k\geafYl]\l`akgmlZgmf\
Y[lanalq&;`afY$BYhYfYf\Kgml`Cgj]Y$lg_]l`]j$Y[[gmfl]\^gj
gn]jYl`aj\ +/gjMK+1Zaddagf!g^l`]_dgZYd\]YdnYdm]af
*()*&

L`]\]n]dghe]flg^eaf]jYdkj]kgmj[]kaf]e]j_af_][gfgea]k
`Y\Z]]fY[`Ydd]f_]afl`]hYkl\m]lgYfmeZ]jg^^Y[lgjk$
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Exhibit 19: Global distribution of mineral reserves in 2012
100%
80%
60%
40%
20%

Developed Economies

Emerging Economies

Source: United States Geological Survey

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Indian mining industry slowing down but

huge potential

Recent developments
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Mineral

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Iron ore

:Ympal]

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Source: Annual report FY13, Ministry of mines, Government of India

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Environmental monitoring in Goa affecting production: <mjaf_
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Government plans to hike iron ore royalty by 50%: 9hYf]d
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Yj]Ydj]Y\q^]]daf_l`]`]Ylg^l`]][gfgea[kdgo\gof`mjlaf_
l`]ajj]n]fm]k&Afl`ak[gfl]pl$l`]jak]afajgfgj]jgqYdlqogmd\
e]YfYfY\\alagfYdZmj\]fg^AFJ-((/((af[gklg^hjg\m[lagf
h]jlgfg^kl]]d&
*, ?gYeafaf_jekk]jn]\fgla[]^gjhgddmlaf_oYl]jZg\a]k$09m_mkl*()*$
L`]Hagf]]jnaY>Y[lanY
*- *eaf]kaf?gYYkc]\lgk`ml\gof^gjhgddmlaf_Yjanmd]l$*+9hjad*()*$
Hj]kkLjmklg^Af\aYnaY>Y[lanY
*. *eaf]kaf?gYYkc]\lgk`ml\gof^gjhgddmlaf_Yjanmd]l$*-Bmf]*()+$
Af\aY=f]j_qF]oknaY>Y[lanY
*/ Af\aYk;ADeakk]kgmlhmllYj_]l^gj9hjadBmdq*()+$*9m_mkl*()+$HdYllk
;geeg\alqF]oknaY>Y[lanY
Mining in Emerging Economies - Sharing the Spoils | )/

Impact of Currency
depreciation

Exhibit 22: Historical Currency Movement

60
40
20

INR- USD

86

Jun-13

Feb-13

Oct-12

Jun-12

Feb-12

Oct-11

Feb-11

INR - EURO

INR - GBP

Source: RBI

84

L`]Jmh]]k\]hj][aYlagfakgfZYdYf[]Yf\akhgkalan]^gjl`]
Af\aYfeafaf_k][lgj&Egklg^l`]eafaf_[gehYfa]kafAf\aY
Yj]f]l]phgjl]jkYf\ogmd\]ph]ja]f[]Yhgkalan]aehY[lgf
Zgllgedaf]k&>mjl`]jegj]$\ge]kla[hja[]k]llaf_k^gjk]n]jYd
eaf]jYdk^gddgoY_dgZYdhja[]Z]f[`eYjc&@go]n]j$l`]]pY[l
aehY[lg^[mjj]f[q\]hj][aYlagfogmd\nYjqY[jgkk[gehYfa]k
Yf\ogmd\\]h]f\gfkh][a[afl]jfYdhgda[a]kj]_Yj\af_^gj]a_f
[mjj]f[q`]\_af_$^gj]a_f[mjj]f[qdgYfkgjkgmj[af_kljYl]_q
Yf\[gfljY[lmYdf]_glaYlagfoal`[mklge]jk&

82
DXY

Jun-11

88

Oct-10

90

Jun-10

0
Oct-09

Exhibit 21: Dollar Index Movement

80

Feb-10

L`]Af\aYf[mjj]f[q`Yk\]hj][aYl]\Y_YafklYddeYbgj_dgZYd
*0
[mjj]f[a]k&9dl`gm_`l`]\gddYjaf\]p `YkYhhj][aYl]\afl`]
dYkl^]oimYjl]jkYf\`Y\hdYq]\alkhYjlaf\Yeh]faf_l`]nYdm]
g^Jmh]]$gl`]j^Y[lgjkkm[`Ykkdgoaf__jgol`$af[j]Ykaf_
[mjj]flY[[gmfl\][alYf\kdgo\gofaf^gj]a_fafn]kle]flk
`Yn]Y[[]flmYl]\l`]aehY[l&

Avg Exhchange rate: INR

100

80
78
76
74
72

07/31/2013

03/31/2013

12/14/2012

08/30/2012

05/11/2012

01/06/2012

09/02/2011

04/29/2011

12/22/2010

08/18/2010

04/14/2010

12/07/2009

08/03/2009

70

Source: Wall Street Journal

Af_]f]jYd$egklg^l`]keYddeaf]jk$]kh][aYddqg^ajgfgj]$
\]jan]Yka_fa[YflhYjlg^l`]ajj]n]fm]l`jgm_`]phgjlk&L`]
j][]fl^Yddafajgfgj]hja[]kYf\l`]af[j]Yk]af]phgjl\mlq
^jge*(lg+(`Y\YfaehY[lgf]phgjl[geh]lalan]f]kk$
af[j]Ykaf_l`]^g[mkg^l`]k][gehYfa]kaf\ge]kla[eYjc]lk&
L`]^YddafJmh]]knYdm]ogmd\hjgna\][mk`agflgl`]k]
[gehYfa]kZgllgedaf]kY_YafklY^Yddaf_dgZYdhja[]k&L`akeYq
`]dhYZkgjZkge]g^l`][gklaf[j]Yk]k]ph]ja]f[]\Zqeaf]jk&

US$

Exhibit 23: Iron ore prices (62% Fe) price

160
140
120
100
80
60
40
20
0

FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13

100%
80%
60%
40%
20%
0%
-20%
-40%

Source: Mired in Mining Mess- Next is Odisha, 28 May 2013 via Thomson
Research

*0 9faf\]plge]Ykmj]l`]nYdm]g^Mfal]\KlYl]k\gddYjj]dYlan]lgZYkc]lg^
^gj]a_f[mjj]f[a]k&
)0 | Mining in Emerging Economies - Sharing the Spoils

India iron ore mining update

9egf_eYbgj_dgZYddqljY\]\[geeg\ala]k$Af\aYakkmhhgk]\dqgf]g^l`]dYj_]klhjg\m[]jkg^ajgfgj]&Af^Y[l$af*()($Af\aY
Z][Ye]l`]l`aj\%dYj_]kl]phgjl]jg^ajgfgj]&L`af_k`Yn][`Yf_]\^jgel`]j]gf$oal`eYbgjajgfgj]%hjg\m[af_j]_agfk$CYjfYlYcY
Yf\?gY$[geaf_mf\]jl`]k[jmlafqg^l`]Kmhj]e];gmjlg^Af\aY&J]klja[l]\hjg\m[lagf^jgel`]k]j]_agfd]\Af\aYlgZ][ge]Yf
aehgjl]jg^ajgfgj]\mjaf_l`]dYklk[Yd&Akkm]kafl`]k]logeYbgjajgfgj]%hjg\m[af_j]_agfk[gmd\khj]Y\lgG\ak`Y$YklYl]l`Yl
[mjj]fldqY[[gmflk^gjYjgmf\,(g^Af\aYkajgfgj]hjg\m[lagf&L`]^gddgoaf_lYZd][d]Yjdqj]][lkl`Yllog%l`aj\kg^l`]Af\aYfajgf
gj]af\mkljqakfgomf\]jk]n]j]hjg\m[lagf[gfkljYafl2
=p`aZal*,2Ajgfgj]hjg\m[lagfafAf\aY
State

R&R
(million tons)

Production
FY12 (million
tons)

PSU share in
production

Private share in States

production
production (%)

G\ak`Y

-$1+(

./&(

)*

00

,(

Goa

)$),1

++&+

(

)((

*(

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1$1.(

)+&)

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0

;``Yllak_Yj`

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/)

*1

)0

B`Yjc`Yf\

,$.(/

)0&1

,-

--

))

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)./&+

*.

/,

Source: Mired in Mining Mess- Next is Odisha, 28 May 2013 via Thomson Research

L`]E&:&K`Y`;geeakkagf$o`a[`afn]kla_Yl]\CYjfYlYcY
Yf\?gY$akafl`]hjg[]kkg^n]ja^qaf_ajj]_mdYjala]kafG\ak`Y
ajgfgj]eafaf_&L`];geeakkagf`Yk[gehd]l]\l`]h`qka[Yd
n]ja[Ylagfg^eafaf_d]Yk]k$Yf\fgeYbgjajj]_mdYjalq`YkZ]]f
^gmf\&@go]n]j$afalkafl]jaej]hgjlkmZeall]\afK]hl]eZ]j
*())$l`][geeakkagfe]flagf]\kge]add]_Ydeafaf_afl`]
j]_agfYf\ZdYe]\_j]]\^gj]phgjlkYkl`]hjaeYjqf\af_&
L`ak`Yk[Ymlagf]\dg[YdYml`gjala]k$o`a[``Yn]lYc]fl`]
^gddgoaf_e]Ykmj]klgYnga\^mjl`]jajj]_mdYjala]k2


L`]klYl]_gn]jfe]fl`Yk[Yhh]\ajgfgj]hjg\m[lagfYl
-/eaddagflgfk&
Al`YkYffgmf[]\hj]^]j]f[]^gjdg[YdklYl]hjg[]kkaf_Yf\
`Ykklghh]\d]Yk]j]f]oYd^gj]phgjl]jk&L`]k]eaf]jk
fgof]]\lgkmZealY[gehj]`]fkan]hdYf^gjk][gf\Yf\
kmZk]im]flj]f]oYdk&
L`]_gn]jfe]fl`YkYdkgaehgk]\h]fYdla]kgf]p[]kk
eafaf_$f]oklYeh\mlqd]na]k$]l[&

9fqhYjlaYdgj[gehd]l]ZYfgfG\ak`Yeafaf_[gmd\`Yn]
^Yj%j]Y[`af_[gfk]im]f[]kgfl`]Af\aYfajgfgj]eYjc]l&A^
[gee]j[aYdeafaf_$gl`]jl`Yf[Yhlan]eafaf_$akZYff]\$al
[gmd\d]Y\lgYk`gjlY_]g^Yjgmf\,(eaddagfg^ajgfgj]oal`af
l`]klYl]&Alogmd\ljYfkdYl]aflgYdgkkg^,-eaddagflgfkg^kl]]d
[YhY[alqkhj]Y\Y[jgkk*(*-kl]]dhdYflkafl`]=Ykl]jfj]_agf&
Egj]gn]j$l`]klYl]_gn]jfe]fl`YkYdj]Y\qka_f]\EgMk
ogjl`-(eaddagflgfkg^ajgfgj]&A^l`]ZYfakaehgk]\$aloaddZ]

\a^[mdllgk][mj]ajgfgj]^gjl`]k]hjgb][lk$d]Y\af_lghjgb][l
*1
\]dYqYf\[gkl]k[YdYlagfk&
Afl`][mjj]fl]fnajgfe]flg^[mjj]flY[[gmfl\][al$al
Z][ge]kaeh]jYlan]^gjl`]_gn]jfe]fllg[mjZaehgjlkYf\
hjgegl]]phgjlk&@go]n]j$`ac]kaf]phgjl\mlq$Yf\j]klja[lagf
gfeafaf_Yf\ZdYfc]lZYfk`Yn]hj]n]fl]\l`]_gn]jfe]fl
^jge]Yjfaf_^gj]pj]n]fm]gf]phgjlk&Afl`]dYkl^]oq]Yjk$
l`][gfljaZmlagfg^ajgfgj]$afnYdm]l]jek$`Yk\jghh]\
[gflafmgmkdql`jgm_`>Q(1>Q)+&
=p`aZal*-2Ajgfgj]]phgjlkYkg^lglYd]phgjlk^jgeAf\aY
US$
million

Iron ore export Total export

(value)
(value)

Percentage

>Q(1

,$/.1

)0-$*1) *&-/

>Q)(

.$(+(

)/0$/,/ +&+/

>Q))

,$.)-

*,/$+-- )&0/

>Q)*

,$,(-

+(,$1-0 )&,,

>Q)+

)$-11

+(($*)- (&-+

Source: Mired in Mining Mess- Next is Odisha, 28 May 2013 via Thomson
Research

*1 Kgmj[]2Eaj]\afEafaf_E]kk%F]plakG\ak`Y$*0EYq*()+naYL`gekgf
J]k]Yj[`
Mining in Emerging Economies - Sharing the Spoils | )1

L`]\jghakgfY[[gmflg^\][j]Yk]\hjg\m[lagfngdme]kg^ajgf
gj]&KaeadYjdq$l`]aehgjlg^[gYd`Ykaf[j]Yk]\kmZklYflaYddq
\mjaf_l`]dYkl^]oimYjl]jk$Yk;gYdAf\aY`YkfglZ]]fYZd]
lgka_fa[Yfldqaf[j]Yk]alkhjg\m[lagf&E]Yfo`ad]$l`]j]Yj]
mf[]jlYafla]kafl`][gYdk][lgjh]jlYafaf_lgl`]gf_gaf_
k[jmlafqYjgmf\Zdg[cYddg[Ylagf&

[gfljY[leafaf_^gjj]\m[af_[gklYf\af[j]Ykaf_hjg\m[lagf
afgh]f%[Ykleaf]k&Egklg^l`]dYj_]eafaf_[gehYfa]k`Yn]
klYjl]\\]d]_Ylaf_hjgb][lklg[gfljY[leaf]jk&KaeadYjdq$
hjanYl]hdYq]jkl`Yl`Yn]j][]fldq_gleaf]kYj]YdkgY\ghlaf_
l`][gfljY[leafaf_eg\]d\m]lgl`]dY[cg^j]imaj]\eafaf_
]ph]jlak]Yf\]ph]ja]f[]&

Mining services picking up

;gfljY[leafaf_[gmd\hjgn]lgZ]Ykgdmlagflgl`]gf_gaf_
[mjj]fl[gYd\][alaf[gmfljq&9lhj]k]fl$afAf\aY$mf\]j_jgmf\
eafaf_[gfklalml]kgfdq)*g^l`][gmfljqklglYd[gYd
hjg\m[lagfaf[gehYjakgflg;`afY$o`]j]mf\]j_jgmf\eafaf_
Y[[gmflk^gj1(g^lglYd[gYdhjg\m[lagf&Dgo]jhjg\m[lagf
^jgemf\]j_jgmf\eafaf_afAf\aYakeYafdqZ][Ymk]hdYq]jk
^g[mkgf]phdgjaf_j]k]jn]kl`Yl[YfZ]j]Y\adqlYhh]\&9k
km[`$j]k]jn]k^jgegh]f%[Yklhjgb][lk`Yn]\]hd]l]\YlY
^YkljYl]$eYcaf_alf][]kkYjqlg[gfka\]jmf\]j_jgmf\eafaf_
lgeYaflYafl`]_jgol`jYl]g^[gYdhjg\m[lagf&Egj]gn]j$
]n]fafgh]f%[Ykleafaf_$l][`fgdg_qYf\]imahe]flmk]\
j]eYafY[gf[]jf&9k]^[a]fl$kY^]Yf\[gkl%]^^][lan]eafaf_
Z][ge]kl`]f]]\g^l`]`gmj$\]eYf\^gj`a_`dqe][`Yfar]\
Yf\YmlgeYl]\l][`fgdg_a[Yd]imahe]flakaf[j]Ykaf_&9kl`]
af\mkljq^g[mk]kgfY\Yhlaf_afl]jfYlagfYdd]n]dkg^l][`fgdg_q$
l`]j]]paklkmflYhh]\hgl]flaYdafl`]Af\aYfeafaf_]imahe]fl
k][lgj&Oal`YeYjc]lnYdm]g^MK*+.,eaddagf$Af\aYY[[gmflk
+)
^gj/g^l`]9kaY%HY[a[eYjc]l &9[[gj\af_lgl`]Lo]d^l`
>QH$l`]eYjc]lkar]g^]Yjl`%egnaf_Yf\eafaf_]imahe]flak
32
^gj][Ykllg_jgoZq)1&-;9?Jmflad*().)/ &

Kge]Eg\]dkg^Eafaf_[gfljY[lkafAf\aY

K]d][lan]
Gmlkgmj[af_

;gfljY[lEafaf_

E<G

HjaeYjq^g[mkak
gfdYZgjkmhhdq
^gjYp]\l]je'
Ykka_fe]fl

D]Y\af_[gfljY[l
eaf]jkYj]=kk]d$
Ljan]fa$Jmf_lY$
KYafacEafaf_

J]_agfYd
\geafYf[]g^
dg[Ylagfkh][a[
keYdd[gfljY[lgjk

:a_hdYq]jkkm[`
Yk;gYdAf\aY
Yf\K9ADYj]
\]n]dghaf_af%
`gmk][YhYZadala]k

E<GZjaf_k
af[YhalYd$
l][`fgdg_qYf\
][gfgea[kg^
k[Yd]3alakafl`]
afalaYdklY_]Zmlak
ha[caf_mh^Ykl

Source: EY Research

L`]dYj_]kleafaf_[gehYfqafAf\aY$a&]&$;gYdAf\aYDaeal]\
;AD!$hdYfklgafn]klYjgmf\AFJ*-,Zaddagf\mjaf_l`]Lo]d^l`
>QH *()*)/!&L`][gehYfq`YkklYjl]\egnaf_lgoYj\
+( 9mkljYdaYkD]a_`lgfoafk-&+Zaddagf[gYd[gfljY[l$*<][]eZ]j*()($
9_]f[]>jYf[]Hj]kk]naYL`gekgfJ]k]Yj[`
*( | Mining in Emerging Economies - Sharing the Spoils

Exhibit 26: Twelfth plan target earth-moving and mining

equipment

INR Billion

<]khal]l`]kdgo\gof$Af\aYakkladdl`]k][gf\%^Ykl]kl_jgoaf_
][gfgeq$Y^l]j;`afY&<]eYf\^gjeaf]jYdk$Yko]ddYk^gj
eafaf_k]jna[]k$akjgZmklafl`][gmfljq&9lhj]k]fl$l`]eafaf_
k]jna[]keYjc]lak^jY_e]fl]\Yf\ak[`YjY[l]jar]\Zqj]_agfYd
\geafYf[]oal`hggj][gfgea]kg^k[Yd]Yf\o]Ycgh]jYlagfYd
eYfY_]e]fl&F]n]jl`]d]kk$alakdac]dqlg_]l[gfkgda\Yl]\Yf\
kljm[lmj]\afl`]f]pl^]oq]Yjk&Eafaf_afAf\aYakZ][geaf_
egj]kljm[lmj]\$Yf\[gehYfa]k`Yn]klYjl]\gmlkgmj[af_
hYjlg^l`]hjgb][llgeafaf_k]jna[][gehYfa]k&>gjafklYf[]$
;gYdAf\aY`YkYoYj\]\Yeafaf_\]n]dghe]flYf\gh]jYlagfk
E<G![gfljY[llgL`]kakAf\aY^gjalkFLH;HYcja:YjoY\a`
;gYdHjgb][l&;gYdhjg\m[lagfogmd\Z]jYeh]\mhlg)-eaddagf
lgfkh]jYffmegn]jl`]jkll`j]]q]Yjkg^eafaf_$oal`Yf
aehjgn]\eaf]hdYfhjghgk]\ZqL`a]kk&Egj]l`Yf+((eaddagf
lgfkg^[gYdoaddZ]eaf]\gn]jl`][gfljY[l\mjYlagf dac]dq
+(
lgkhYf**q]Yjk! &;mjj]fldq$kge]g^l`]eg\]dkg^eafaf_
k]jna[]kha[caf_mhafAf\aYYj]2

500
450
400
350
300
250
200
150
100
50
0

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Market Size
Production
Import
Export
Source: Report of the Working Group on Capital Goods & Engineering Sector for
the 12th Five Year Plan (2012-2017)

L`]\]n]dghe]flg^eafaf_]imahe]flYf\l][`fgdg_q^gj
mf\]j_jgmf\[gYdeafaf_hj]k]flkY_j]Ylghhgjlmfalq$Yk
hjg\m[lagf^jgemf\]j_jgmf\[gYdeaf]kakdaeal]\lgYjgmf\

+) Eafaf_=imahe]flaf9kaYHY[a[$EYjc]lDaf]$EYq*()+$naYL`gekgf
J]k]Yj[`
32 J]hgjlg^l`]Ogjcaf_?jgmhgf;YhalYd?gg\k=f_af]]jaf_K][lgj^gjl`]
)*l`>an]Q]YjHdYf *()*%*()/!

-(eaddagflgfk&Kaf[]hjg\m[lagf^jge]paklaf_gh]f[Ykleaf]k
ak^Ydl]jaf_$l`];gYdEafakljqak\]nakaf_Yfaf[]flan]hY[cY_]lg
Zggklmf\]j_jgmf\eafaf_&Alaf[dm\]k\a^^]j]flaYdjgqYdlqjYl]k
Yf\afn]kle]fl%dafc]\lYp`gda\YqklgZggkll`]jYha\Y\ghlagf
g^l][`fgdg_a]k^gjeYkkhjg\m[lagf&9dkg$lgYlljY[l^gj]a_f
afn]klgjk$;gYdAf\aYakfgoj]\jY^laf_alkl]f\]j\g[me]flklg
YddgoZa\\af_afMK\gddYj&<m]lgl`]oad\m[lmYlagfafJmh]]$
_dgZYdhdYq]jkYf\hjgkh][lan]Za\\]jkYj]mfoaddaf_lgk`Yj]
l`]\gofka\]jakcg^[mjj]f[qm[lmYlagf&;ADoaddYddgoZa\\]jk
lg[dYaehYqe]flaf\gddYj^gjemdla%q]YjeYafl]fYf[]Yf\
j]hYaj[gfljY[lk&

Major challenges in the Indian

mining sector
9o]Yc]pl]jfYd]fnajgfe]fl$jYehYfl[gklafYlagfYf\`a_`
afl]j]kljYl]Yea\^Yddaf_][gfgea[_jgol`jYl]`Yn]d]\lgYf

af\mkljq%oa\]\aj][lagfYd[`Yf_]afl`]Af\aYfeafaf_af\mkljq&
EYj_afkYj]kim]]raf_Yf\_gn]jfe]flY_]f[a]kYj]lo]Ycaf_
j]klja[lagfkgfe]j[`Yfleafaf_$]phgjlk$`a_`]jlYp]kYf\
jgqYdla]k$]l[&;gjhgjYl]kYj]egnaf_YoYq^jge[`Ykaf__jgol`
^g[mk]\gfdgf_%l]jeghlaearYlagfg^gh]jYlaf_[gklk$[YhalYd
Yddg[YlagfYf\hjgl][lagfg^nYdm]g^l`]ajZmkaf]kk]k&L`]jakc
akl`Yll`]\][akagfklYc]fZqeafaf_Yf\e]lYdkklYc]`gd\]j
_jgmhk[gmd\\YeY_]_jgol`hjgb][lkYf\\]kljgqdgf_%l]je
nYdm]_]f]jYlagfhgl]flaYdg^l`]af\mkljq&Af\aYf][gfgea[
_jgol``Ykkdgo]\\goflg-$l`]dgo]klafl`]dYklgf]
\][Y\]$Yf\l`]Af\aYfeafaf_Yf\e]lYdaf\mkljqf]]\klg
Y\bmkllgf]oj]Ydala]k$[`Ydd]f_]kYf\[`Yf_af_jakchjgd]k&
Afn]klgjk`Yn]klYjl]\Z][geaf_oYjqYZgmll`]Af\aYf_jgol`
klgjqYf\Yj]afl`]hjg[]kkg^j]Ykk]kkaf_l`]ajafn]kle]fl
hgjl^gdag&L`]Business risks facing mining and metals 201314j]hgjlj]d]Yk]\Zq=Q]Yjda]jl`akq]Yj^g[mk]kgfeYbgj
kljYl]_a[Yf\gh]jYlagfYdjakckl`Yl[gehYfa]kYj]^Y[af_&

Exhibit 27: Business risks facing global mining and metals industry2013-14

1.

Down from 2012

n
tio
ss

Up from 2012

t
d men

stitutes
of sub
t
a
e
Thr
ss
10.
ture acce
struc
a
r
f
n
9. I
e ts
the ben
ring
a
h
8. S
roject execution
ital p
p
a
7. C
currency volatilit
y
e and
c
i
r
P
6.
hortage
ills s
k
S
5.
ense to oper
ial lic
ate
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Same as 2012

New entry

Source: EY Research

Mining in Emerging Economies - Sharing the Spoils | *)

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Social license to operate: L`]hjgl]klg^[geemfala]k

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`Yn]_an]fYf]o\ae]fkagflg[geemfalq]ph][lYlagfknak%%
nako`Yll`]eafaf_af\mkljq`Y\l`mk^YjZ]]f\]dan]jaf_&
Competing demand for land use:L`]Af\aYf][gfgeqak
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22 | Mining in Emerging Economies - Sharing the Spoils

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l`]]ph][lYlagf&
Regulations: Eafaf_[gehYfa]kYj]af[j]Ykaf_dq^Y[af_l`]
[`Ydd]f_]g^f]ogjklja[l]jd]_akdYlagfYjgmf\j]kgmj[]
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Y[[]kk&JakckYf\[gklkYkkg[aYl]\oal`j]_mdYlgjq[gehdaYf[]
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lge]]ll`]]ph][lYlagfkg^j]_mdYlgjk[Yfd]Y\lgf]k$
^gj^]almj]k$Zmkaf]kkj]klja[lagfkYf\j]hmlYlagfYd\YeY_]&Af
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[gehdaYf[]`Yn]af[j]Yk]\&;gehYfa]kf]]\lgafn]klY
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kljgf__gn]jfe]flj]dYlagfk$Ykl`akaknalYd^gjkmklYaf]\
eafaf_gh]jYlagfk&LgY\\j]kkkge]g^l`]k]akkm]k$l`]Af\aYf
?gn]jfe]flYhhjgn]\l`]EE<J:addaf*())$o`a[`$`Ynaf_
mf\]j_gf]k]n]jYdeg\a[Ylagfk$akkladdYoYalaf_]fY[le]fl&
Infrastructure access: Af^jYkljm[lmj]j]eYafkl`]c]q
\a^^]j]flaYlgjafl`]\]n]dghe]flg^l`]eafaf_af\mkljq$
hYjla[mdYjdqafYf]oeafaf_j]_agf&Alakl`]kaf_d]%dYj_]kl
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j]kgmj[]k&AfAf\aY$eafaf_[gehYfa]k$]kh][aYddq;gYdAf\aY$
Yj]fglYZd]lgaf[j]Yk]l`]ajhjg\m[lagfka_fa[Yfldq\m]lg
l`]dY[cg^jYadaf^jYkljm[lmj]&9kh]jl`];gYdEafakljq$Yjgmf\
*1(eaddagflgfkg^[gYdhjg\m[lagfak[gmd\^Y[]]nY[mYlagf
[`Ydd]f_]\mjaf_l`]Lo]d^l`>QHaf;gYdAf\aYkeaf]kaf
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afYka_fa[Yflaf^jYkljm[lmj]^mf\af__Yh$o`]j]f]al`]j
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Capital project execution: NgdYladalqaf[YhalYdYf\[geeg\alq
eYjc]lk\mjaf_l`]dYkln]q]Yjk`Ykkmhj]kk]\l`]jakc
Yhh]lal]g^afn]klgjk$o`gfgodggc^gjoYj\lgk`gjl]j%l]je
j]lmjfkgj`a_`]jjakchj]eamek&EYfq_dgZYdeafaf_[gehYfa]k
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l`]dYkl\][Y\]Yea\`a_`[gklk$dgo]jeaf]jYdkhja[]k$
j]kgmj[]fYlagfYdakeYf\\aeafak`af_'mf[]jlYafj]lmjfk&Hggj
eYfY_]e]flg^[YhalYdhjgb][ljakc[gmd\[gehjgeak]l`]
k[`]\md]Yf\[gklZm\_]lkYf\[gmd\Ydkgf]_Ylan]dqaehY[lY
eafaf_hjgb][lknaYZadalq$_jgol`hjgkh][lkYf\gn]jYddfYf[aYd
`]Ydl`&L`akakkm]ako]ddgZk]jn]\afnYjagmkk][lgjkkm[`Yk
kl]]d$jYadoYqk$`a_`oYqkYf\hgo]jhjgb][lk$Yf\l`]eafaf_
k][lgjakfg]p[]hlagf&K]n]jYdhjgb][lk^gjkdmjjqhah]daf]k
+- *1(EL;gYd]nY[mYlagf`Yeh]j]\\m]lgdY[cg^jYadaf^jYkljm[lmj]$E]lak
K][lgjaYdHgkl$-Bmf]*()+naY>Y[lanY

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oal`afY^]o\][Y\]k$eYqdgk]nYdm]Ykl`]k[jYh[q[d]klYjlklg
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Margin protection and productivity improvement: @a_`[gklk$

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Fraud and corruption:Afj]_agfkkm[`YkAf\aY$o`]j]dYok

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kmhhda]jk$]ehdgq]]kYf\[mklge]jk&>gjafklYf[]$af?gY$l`]
ZYfgfajgfgj]eafaf_`Ykhmk`]\ZYfc\]hgkalklgYf]_Ylan]
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+.
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YkaeadYjkalmYlagf&

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eala_Yl]\$[gmd\af[j]Yk]]phgf]flaYddqgn]jlae]&

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Recommendations for
stakeholders
L`]eafaf_af\mkljq]na\]fldq`YkljYn]jk]\l`jgm_`Y
[`Ydd]f_af_bgmjf]qafAf\aYafj][]fllae]k&Hggj_gn]jfYf[]
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_jgmhk$d]Y\af_lg]n]fdY[cg^[geemfa[YlagfYllae]k&O`ad]
l`]af\mkljq`Ykl`]hgl]flaYdlg[j]Yl]o]Ydl`Yf\Zggkll`]
][gfgeq$klYc]`gd\]j_jgmhk`Yn]dYj_]dqZ]]fghhgjlmfakla[
afk`Yjaf_l`]khgadk$jYl`]jl`Yffmjlmjaf_l`]e^gjdgf_l]je
nYdm][j]Ylagf&O`ad]l`]af\mkljqakkljm__daf_oal`k]n]jYd
aee]\aYl]l]jeakkm]k$l`]^gddgoaf_afalaYlan]kYj]dac]dqlgZ]
g^hYjla[mdYjka_fa[Yf[]lgY[[]d]jYl]\]n]dghe]fl^gjZ]f]l
g^YddklYc]`gd\]jk&2


Promote transparency:9[[gj\af_lgnYjagmk_dgZYd
eafaf_kmjn]qk$Af\aYakjYfc]\dgogfYlljY[lan]f]kkg^
l`]_gn]jfe]fleafaf_hgda[a]k&:][Ymk]g^l`ak$\]khal]
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[geeale]flg^[YhalYd^jge^gj]a_fhdYq]jkafl`]dYkl^]o
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]fnajgfe]fl$Yf\l`]_gn]jfe]fl[gmd\egfalgjl`]
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[gmfljq&

Regulatory certainty:Mf]f\af_mf[]jlYaflqgn]j
j]_mdYlagfkYjgmf\f]o[gf[]kkagfkYf\gh]jYlagfk
gn]jl`]da^][q[d]g^eaf][gflafm]lg[`Ydd]f_]eafaf_

+. Eafaf_ZYf`alkZYfckaf?gY$L`]@af\m$-Bmdq*()+naY>Y[lanY
Mining in Emerging Economies - Sharing the Spoils | 23

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q]Yjklgl`]\jY^l^jYe]ogjc&L`]k]f]]\lgZ]]nYdmYl]\
Yf\[gfka\]j]\YhhjghjaYl]dq&


Recalibrate exploration:L`]_gn]jfe]flk`gmd\mj_]fldq
[gfka\]j^mf\Yddg[YlagflgAf\aYf]phdgjaf_Y_]f[a]k
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l]Yek$k`gmd\Z]]f[gmjY_]\lg^Ykl^gjoYj\l`]\ak[gn]jq
hjg[]kk&
Promote contract mining and other mining services
in India: ;mjj]fldq$egklg^l`]eaf]kmf\]jgh]jYlagf
Yj]gh]f%[Yklgf]k$Ykl`][gmfljqdY[ckl][`fgdg_q
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YZ]_affaf_`YkZ]]feY\]$l`]j]akYf]]\lghjgegl]

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*0 | Mining in Emerging Economies - Sharing the Spoils

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