Sand mining: consumption, production, revenue royalty rates and sale price

georgism
natural resources
Author

Vinamr Sachdeva

Published

November 26, 2022

A few months ago, Rahul Mehta had put out a Facebook post in which he tried to estimate the possible economic rent per adult citizen of India can derive from sand mining. I’m puting out this post to show the numbers I have been able to find from the Sand Mining Framework of 2018 (click to download) that the Ministry of Mines had published. First, I’ll attach Mehta’s post and then my findings from a brief scan I took of the Sand Mining Framework.

From the Sand Mining Framework document, I was able to find an estimate of India’s annual sand consumption, incomplete data on production, revenue & royalty collection and estimates of sale price. I could not find any estimate of the extraction cost but in the end I show how these figures can help us reach a ballpark or at least help us in judging whether someone’s estimate is reasonable or not.

(All quotes and images henceforth are from the Sand Mining Framework of 2018)

1 Consumption

As per a rough estimate, the demand of sand in the country is around 700 million tonnes in FY17 and it is increasing at the rate of 6-7% annually. […]

Based on a rough estimation, the total sand consumption in India is around 700 million tonnes in 2016-17 which has been derived from the cement consumption.

If we assume that the demand for sand kept increasing at the same rate since FY17 till today, our present consumption in FY23 should be ~900 million tonnes.

2 Production and Revenue

This means that in 2016-17, the total production of sand in India exceeded 228.61 Million Metric Tons and the revenue exceeded Rs. 1,916.93 crores (exceeded because the table doesn’t have production data for Maharashtra, Punjab, Uttrakhand, revenue data for Maharashtra for 2017 and the states it didn’t include in its study).

This means that Mehta underestimated the on-book production. But it is clear that there is a huge difference between the on-book production numbers and the consumption estimate. A very large scale of illegal mining seems to be the only reasonable conclusion unless the states for which data is not available (and import, which I guess was absent for the period of study) account for the 3 times higher consumption estimate.

3 Royalty

This means that royalty on sand varies from Rs. 0 (in just Andhra Pradesh) to Rs. 93 per tonne in Uttrakhand.

4 Sale price

The sale price varies from Rs. 80 to Rs. 2,500 depending on the district and the season

5 Extraction cost

The fact that sand is being sold at Rs. 80 in some districts of Gujarat and Rs. 132 in some of Chattisgarh (including royalties) shows that it can be extracted below that price. Although extraction cost would vary depending on natural difficulties in extraction, cost of labour in the region, etc, it shows that the ballpark figure of Rs. 100 taken by Mehta was reasonable.

I couldn’t read the whole >250 page framework due to lack of time, but in future I’ll try to read as much as I can and will update as soon as I find something worth mentioning here.