Strong economic growth in India and increased demand for Australian mineral resources and mining equipment, technology and services (METS) are forecast to generate big opportunities for both countries while presenting significant challenges for doing business.
The latest report in the Minerals Council of Australia’s (MCA) New Frontiers project based on research by Trading Nation Consulting outlines good prospects for resources trade and solid engagement between Australia and India on mining-related investment – mostly based on METS.
Within a decade, India will be the world’s most populous country and by mid-century it could be the world’s second-biggest economy. Australia already has close links with India in several other industries such as trade, tourism and sport, but mining and mining services are key sectors where this relationship can be expanded.
According to the report, India represents a major opportunity but also presents big challenges for doing business – with inconsistent application of taxes and regulation, onerous bureaucracy and a tough business environment where price prevails over value for money.
The MCA anticipates that these challenges will not disappear quickly and developing the Australia-India economic relationship will ‘be a bumpy ride’.
The India edition of ‘New frontiers: South and East Asia’ found that Indian companies are interested in investing in Australian resources and land, but struggle with Australia’s regulatory system and political campaigns targeting foreign investment.
The report further found that opportunities for the Australian minerals and METS sector include:
- Indian thermal (energy) coal consumption rising faster than any other major economy because of increased electrification, while domestic supply and demand remains tight because coal sector reform has hardly started
- A tripling of crude steel production driving consumption of metallurgical (steel-making) coal, which India would need to import (along with nickel, chromite and manganese ore) given that it has no viable deposits
- Rising demand for nuclear energy and the need for imported uranium
- Rapidly growing demand for lithium and rare earth minerals from expanding the use of electric vehicles, along with imported copper ores and concentrates and cobalt
- The supply of a wide range of technologies and services by Australian METS firms as India’s mining sector grows and modernises.
New frontiers: South and East Asia is a research study by Mike Adams, Nicolas Brown and Ron Wickes, the partners of Trading Nation Consulting, for the Minerals Council of Australia.
The full report can be found here.