Exploring the possibilities in India
Opportunities are opening up in India for small to mid-sized Canadian mining companies, says the Canada-India Business Council
With its growing population—1.2 billion at last count—India is set to overtake China as the largest country in the world by 2025. Currently the fourth largest energy consumer in the world, India has a large middle-class population that has begun urbanizing, modernizing and industrializing with an almost insatiable need, putting a demand on the country's resources and infrastructure. And that demand, said Peter Sutherland, has levelled the playing field for small to mid-sized companies to take advantage of the opportunities India offers.
“I would never be so bold as to counsel a company that India is the place they should go,” said Sutherland, who is vice-chairman of the Canada-India Business Council (C-IBC) and former high commissioner to India. “I think India is a place they should look at, along with others, and then compare what makes the best sense from their perspective. They have to assess the many opportunities that are out there, but I think the message that we want to communicate is that India is one of the countries that has tremendous potential and should be looked at and considered by Canadian companies of all sizes.”
How it works in practice
According to a press release issued by the C-IBC, Karnalyte Resources, a small mining company in Alberta, recently landed a “strategic investment in India after (it) sealed a deal with Gujarat State Fertilizers & Chemicals Limited (GSFC), an Indian farm business that makes fertilizer and industrial products.” It is a deal, C-IBC said, that has an estimated worth of $45 million, placing this once-small mining company now in competition with some of India’s leading importers. It’s these types of success stories that Sutherland sees as being possible for others in the industry.
“There are two aspects to the opportunities available in India that companies should be aware of: the aspect of being able to attract Indian capital, and the aspect of being able to either invest in and/or be a provider of goods or services to the resource industry in India,” said Sutherland.
He said that while India was once just an afterthought, today it offers considerable opportunities "for those companies in exploration, or those that provide equipment, for those with new technologies in the environmental sector, or those with new mining technologies—and especially for those who have specialized services to offer."
“If you look at the services side, Canada of course is one of the world leaders in terms of financing of mines and resources in general,” Sutherland said, “as well as in the other kinds of legal, accounting and other professional services that are attached to doing transactions or deals with respect to buying or selling properties or companies that are involved in that resource extraction. So in that respect, companies have an opportunity to market their services—not just in respect to Indian transactions in Canada, or even Canadian transactions in India, but to Indian transactions around the world.”
Opportunities to provide expertise
With India expanding its own mining sector to do business around the world, said Sutherland, it will need expertise.
“They don’t have the level of expertise that we do, either on the product side or on the services side, so that opens up real opportunities for Canada,” he said.
Why Canada specifically as opposed to other countries?
“First of all,” said Sutherland, “we’re well endowed; we’re very fortunate to have a tremendous resource endowment in areas that are of interest to India, but also because we’re a politically stable country, which is—when you’re trying to establish a long-term relationship and a long-term investment—a very important consideration.”
Realizing that it has a huge need to develop its mining sector and to increase its production, the Indian government is looking to attract private-sector investment—both domestic and foreign—and it has taken steps to streamline its mining legislation to make it more comprehensible and user friendly. But beware, Sutherland cautioned: the Indian national policy doesn’t always trickle down to the individual states when companies attempt to do business. This is why, Sutherland stressed, companies must first do their homework and make sure they are connected with the right people before they venture forth.
“You don’t just decide you’re going to do business in India and say, 'Hey, I’m a mining company—what are the opportunities here?' You have to first do your homework," said Sutherland. "You have to investigate the opportunity, do some online research, narrow it down to certain possibilities and then look for advice as to what kind of Indian partners you might want to speak to or what things you should be aware of before you take your next step.
“There are some very informed individuals out there whose whole job is to help Canadian companies do business in India, including in the mining and resource sector.”
Utilize the local resources
The province you do business in might also have avenues and resources that can aid you. With Ontario and Saskatchewan now having memorandums of understanding (MOUs) with India—and trade delegations and new business opportunities being explored by British Columbia, Quebec and Manitoba—contacting the province’s resource development department might be yet another way to discover who exactly the players are in India and how you can become part of the meetings that are being held with them.
The bottom line, said Sutherland, is that India is one of the places that companies in the industry should be looking at to be able to draw their own conclusions.
“For mid-sized companies, you’ve got the junior mining companies that should very much be looking at India,” said Sutherland, "because they’re the ones that have a reputation globally of being the ones that go out and take a bit of risk and try and develop new opportunities. For equipment suppliers and technology suppliers, no doubt there are huge opportunities—not just to go along with Canadian companies but also other mining companies that are already in India, particularly if you’ve got a technology that’s going to improve efficiency and mitigate the environmental impact. And for all of the services related to mining investment—whether it’s in India or Indian companies investing in Canada, or Indian companies investing elsewhere—there are big opportunities there as well.”