How An Indian Mining Company Is Enhancing Diversification And Ensuring Resilient Supply Chains Via Offtakes And Investments In The Australian Mining Sector

Rawmin, a family-owned mining company, embarked on its entry into Australia with the aim of transforming the Indian company into a multinational mining and export conglomerate operating across multiple minerals. The goal was to leverage well-planned investments in cost-effective, long-lasting mining and production assets both within India and globally.

This strategic direction sought to lessen the company's reliance on mineral ore exports from India and instead transition towards comprehensive global trading involving various commodities and energy resources. This case study delves into the details of Rawmin's Australia focused strategy.

Rawmin Mining and Industries Pvt. Ltd. (Rawmin), located in Mumbai, India, operates as a privately held family enterprise. The company is focused on mining, beneficiation, and supply of metallurgical grade bauxite, cement grade bauxite, refractory grade bauxite and other value added products derived from minerals.Its management consists of third-generation entrepreneurs, qualified geologists and mining engineers who bring a wealth of industry experience, by virtue of the family being engaged in the mining sector for over 70 years. They play a pivotal role in keeping international standards of quality, and environmental management throughout the different phases of mining, processing, logistics, and supply. One of Rawmin's distinct advantages lies in its status as a privately-owned entity, which empowers it to make swift business decisions and seize opportunities promptly. The parent company of Rawmin, Saurashtra Minerals Pvt. Ltd., established in 1952, holds a venerable position as one of India's oldest, most distinguished, and foremost mining companies.

Apart from its traditional focus on bauxite mining and export, Rawmin has embarked on a new business strategy aimed at establishing itself as a prominent integrated industrial minerals producer and distributor. This strategic shift involves Rawmin's aspiration to evolve into a diversified manager of natural resources supply chains including a variety of minerals and value-added mineral-based products.

Under this revised plan, Rawmin is actively engaged in the development of supply chains designed to ensure the seamless and sustained provision of essential minerals and their valueadded derivatives. The company's scope now extends to involve the entire process, including production, sourcing, processing, transportation, storage, financing, and distribution of industrial minerals required by both domestic and international industries. Rawmin’s customers around the world are active in a wide range of industries, such as mining, automotive, oil, power generation, alumina / aluminium, and steel production.

Its overarching strategy involves cultivating sourcing capabilities from multiple countries, including India, Australia, UAE, Oman, Guyana and USA. These sourced minerals and products will then be channelled to high-demand and rapidly growing markets, including but not limited to India, China, the Middle East, and select European nations.

In 2015, Rawmin made its entry into the Australian market through an initial offtake agreement (in the form of a marketing partnership) with ABx Group (formerly Australian Bauxite Ltd. ASX: ABX). This collaboration revolved around ABx Group's inaugural mining lease area in Tasmania, the mining operations were in their initial stages. Rawmin's association with ABx Group Ltd. was in the capacity of an offtake customer. The company decided to diversify and explore avenues for sourcing minerals, as part of its forward-looking strategy. Australia emerged as an ideal match for their requisites. Their perception was underpinned by Australia's reputation as a mining-friendly nation, its advanced mining technologies, and its status as an extremely low-risk democratic country.

Rawmin is currently developing a joint venture bauxite mining project, situated in Queensland, in close partnership with ABx Group Ltd (ASX: ABX), through Alumin Pty Ltd (Alumin). Alumin is an Australian special purpose vehicle company, having extensive experience in funding long term sustainable investments in projects involving mining and bulk-shipping of metallurgical grade bauxite to end users around the world. Under the Agreement, Alumin will contribute up to A$18 million of the development costs. For each contribution of A $3.65million, Alumin will earn 10% equity in the ABx Group’s Sunrise Bauxite Project, up to a maximum of 49.9%. ABx anticipates the JV agreement to fund all operations associated with mine and port development.

The primary focus of this joint venture is extraction and processing of metallurgical grade bauxite ore, sourced from Sunrise Bauxite Project, at Binjour plateau and port operations at Bundaberg in Queensland. Binjour is located 115km inland of Bundaberg. The objective is to facilitate the export of processed bauxite through the Port of Bundaberg, located within the Wide Bay Burnett region of Queensland. Also, the joint venture includes the strategic development of port facilities, including the creation of a dedicated Bauxite loading terminal situated at the Port of Bundaberg.

It is projected that the mine at Binjour will initially export 500,000 tonnes per year of metallurgical grade bauxite in its first year of production, then scaling up to full operational capacity of 2 million tonnes, with export expected to customers in India and China. The mine will operate for a minimum of 20 years and will employ local workers in the area. Additionally, up to 50 direct staff will be employed to operate the mine site and port facilities, which is anticipated to have a flow-on effect creating other indirect employment opportunities in the area.

“It was crucial for us to conduct market research to understand the grade of Bauxite being mined by ABx Group and then to identify potential customers. Our joint venture with ABx Group was to help us navigate regulatory and cultural barriers. We were aware that it was vital to build relationships with key stakeholders, including government officials, local communities, and industry associations.” – Bhargav G Thanki, Director, Rawmin Mining, and Industries Pvt. Ltd.

“We were also aware that investing in technology and infrastructure would improve efficiency and competitiveness. Adopting sustainable mining practices and learning these from an Australian company would improve the social and environmental impacts of mining operations and enhance the project's long-term viability.”

“We found that a lot of things and activities that we considered time consuming and frustrating in India were quite smooth in Australia. We saw there was a lot of support and encouragement by the government and our local partners.”

Rawmin predicts a sustained rise in the demand for imported minerals in India. This projection stems from the shifting regulatory landscape. An increasing number of Indian industries, heavily reliant on minerals, are transitioning toward the consumption of imported mineral resources. Rawmin cites the following factors for its entry into the Australia market, and elaborate reasons for industries shifting to a model reliant on 100 percent imported minerals –

• Reforms and regulatory challenges: The absence of comprehensive reforms and the prevalence of stringent rules and regulations with exceptionally high royalty rates on minerals have created a challenging environment for the Indian domestic mineral industries
• Environmental and legal factors: Stringent environmental laws and heightened activism focused on pollution-related issues have led to frequent legal interventions. Local concerns near mining sites often result in disruptions and temporary mine closures
• Labour shortage: The scarcity of skilled labourers for mining operations further compounds the challenges faced by domestic mineral industries
• Depleted reserves and stalled auctions: The depletion of reserves in existing mining leases, coupled with new policies in the mineral auction process by the Government of India, has hindered the initiation of new greenfield mining projects over the past 8 years
• Stringent regulatory regime: An intricate web of strict regulations and compliance requirements, alongside high royalty, and taxes, strains the relationship between the mining sector and governmental bodies, as well as the judiciary. This discord is unlikely to be resolved swiftly
• Exploration hurdles: Private sector exploration and prospecting in untapped regions have stagnated. The lack of incentives for fresh exploration, due to allocation limitations to auctions, has contributed to this situation
• Simplified import processes: Importing minerals sidesteps the Indian mining and environmental laws, offering a straightforward procedure involving Customs and GST departments. This guarantees a consistent supply.