To encourage private participation in the non-coal and non-fuel mineral exploration space, the government has proposed to accord exploration companies the right of first refusal at the time of auction of mines they had explored.
“Exploration shall be incentivised to attract private investments through an adequate financial package or through the right of first refusal at the time of auction, the proposed (National Mineral Policy 2018) suggests that any other appropriate incentive as per international practice,” the ministry of mines said, releasing the policy draft.
India’s mining exploration sector has been largely untapped with only 10% of the 8 lakh square km potentially resource-bearing area explored so far. Mining takes place on just 1% of the explored area. Apart from a couple of state-owned companies, private sector participation in the sector are almost negligible.
Industry experts, however, feel that the proposal would also fail to attract the attention of the world’s big players like Rio Tinto and others, simply because they would not be satiated only with the right of first refusal at the time of auction. They would invest in the sector happily had they were given the option of seamless transfer from reconnaissance permit to prospecting and mining lease. They should also be granted the right to sell the mine, experts opine.
The National Mineral Exploration Policy 2016, analysts feel, has made little difference to the sector. The policy, which is now being implemented, rewards successful exploration with royalty share for the entire lease period of 50 years or a lumpsum amount to be paid by the developer.