In a bid to attract private investments including foreign direct investment into the business of mineral exploration, the Cabinet on Wednesday cleared a new National Mineral Exploration Policy (NEMP) with various incentives for explorers, including a risk cover.
Under the policy, the mining ministry will auction off 100 non-coal, non-fuel blocks to private explorers in the next nine months. The move is expected to encourage high-tech exploration firms, especially those that focus on exploration rather than mining, to work seriously on the country’s largely unknown but presumably rich deposits of base metals and diamonds.
Under NEMP, the mines ministry will carry out auctioning of identified mineral blocks for exploration by private sector on a revenue-sharing basis. In case their exploration leads to auctionable resources, the data created by them will be shared with potential end users who will be given mining rights through a competitive bidding process.
The explorer firms will be paid a part of the royalty by the miners during the lease period, likely 50 years.
“If the explorer agencies do not discover any auctionable resources, their exploration expenditure will be reimbursed on normative cost basis,” an official statement said. Either way, once the exploration work is over, states will take back the blocks from the explorer.
“The exploration sector has been largely untapped in the country. Only 10% of the 8 lakh sq km potentially resource-bearing area has been explored so far. The policy will help attract private sector and FDI,” mines minister Narendra Singh Tomar told reporters after the Cabinet meeting, chaired by Prime Minister Narendra Modi.
Currently, there is a near-absence of exploration firms in India, especially those with the specialised technologies to hunt for rare materials like diamonds, copper, zinc, uranium, etc, which tend to occur at greater depths. As a result, India’s mining industry is largely confined to exploitation of so-called surficial deposits of iron ore, bauxite, etc. The exploration work remained the preserve of public sector GSI and MECL for long; recently, a few state-run firms have been allowed to take up exploration, but that was not enough to address the technology constraints.
Mines secretary Balvinder Kumar said the rules under NMEP would likely to be notified in the next two to three months and the auction of 100 blocks — 70 of them deep-seated minerals like diamonds and gold — for exploration in the first phase would be over in the following six months.
“The NMEP primarily aims at accelerating the exploration activity in the country through enhanced participation of the private sector. There is a need for comprehensive mineral exploration of the country to uncover its full mineral potential so as to put the nation’s mineral resources to best use and thereby maximise sectoral contribution to the Indian economy,” the statement said.
Under NMEP, the government would create baseline geoscientific data as a public good for open dissemination free of charge and carry out a National Aerogeophysical Programme for acquiring state-of-the-art baseline data for targeting concealed mineral deposits.
– 8 lakh sq km: Area with extractable minerals
– 10%: of resource-bearing area already explored
– Exploration long remained the preserve of public-sector GSI and MECL
– Of late, some other state-run firms allowed to do exploration
– 100 GSI-surveyed mineral blocks to be up for grabs for private explorers, including foreign ones, in 8-9 months
– Once the resources are found and estimated, explorers will return the blocks to govt
– Govt will auction off the explored blocks to end users, who will pay a fraction of royalty to explorers over 50-year mining lease period