India plagued by problems acquiring foreign mines
India is not China when it comes to successful acquisitions of foreign mining companies, reports the Wall Street Journal.
The South Asian economic powerhouse needs raw materials to manufacture goods and to power factories, but is restricted in what it can mine domestically. It can take a mining company years to acquire a mining licence, and illegal mining of iron ore, limestone and bauxite has damaged the environment and given mining a bad name. Last year, for example, iron ore mining was banned in the state of Karnataka to prevent further environmental destruction. The government's system of allocating mines is also rife with corruption.
WSJ says Indian mining companies looking to make overseas acquisitions are running into difficulties:
Among the major disappointments is the inability of a consortium set up by five large state-run companies to buy coal mines overseas.
Private sector companies have fared no better in their bid to acquire overseas mines.
Resource nationalism, on the rise in mineral-rich developing countries, is a major roadblock.
Indian companies have had some success in acquiring coal properties in Australia but even here there are problems reports WSJ
In Bolivia, a plan by India's Jindal Steel & Power to mine a 20-billion tonne deposit has run into trouble after the Bolivian government asked the company for another $18 million in bank guarantees for not meeting contractual obligations. A similar amount was demanded in 2010 for not meeting commitments. Supply of gas to the proposed steel plant is the main sticking point.