UPDATE 1-India's cabinet approves new mining policy

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NEW DELHI, March 13 (Reuters) - India's cabinet approved a long-delayed mining policy on Thursday that will ease investments by foreign and domestic companies in the country's mining sector.

"The implementation of National Mineral Policy 2008 would be likely to attract foreign direct investment of $250 million per annum in the mining sector by the end of five years," a government statement said.

It added that under the policy a tribunal would be set up for resolving disputes in mining.

It also said legislation to amend the Mines and Minerals Development and Regulation Act 1957 will be introduced in the current parliamentary session to implement the new mining policy -- which will be operational within six months.

The new policy, delayed for nearly two years by wrangling between federal and state governments, will shorten the time it takes for new mining leases to be granted by state and federal governments to about six months to a year.

At the moment it is often a long and tortuous process.

After the period proposed in the policy, applications will be automatically referred to a tribunal.

Under the new guidelines, foreign and domestic firms should find it easier to invest in the exploration and mining of gold, diamonds and metals like copper and zinc, and prospecting companies will automatically obtain a mining licence.

Only 10 percent of India's land mass has been explored for its mineral wealth, and industry officials say this is largely due to the mass of paper work involved.

India produces 89 minerals, out of which 11 are metallic and 52 non-metallic. The country is estimated to have 2.92 billion tonnes of bauxite, or 10 percent of the world's reserves, and 276 billion tonnes of coal.

It also has 14,000 tonnes of gold reserves, but the country only produces three tonnes of total annual demand of 800 tonnes.

Industry officials say the country's iron ore reserves of 23 billion tonnes were a key factor attracting steel majors like South Korea's POSCO (005490.KS) and world No. 1 Arcelor Mittal (ISPA.AS), but securing mining leases remained a major hurdle. (Reporting by Biman Mukherji; Editing by Mike Elliott)