Mines min may retain clause for reconnaissance permits

By: |
Updated: December 12, 2015 4:52:01 AM

A reconnaissance operation is defined as the one undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical or geo-chemical surveys and geological mapping

The ministry of mines may retain the provision of reconnaissance permits (RPs), at least for deep-seated minerals such as gold and diamond, in the draft National Mineral Exploration Policy.  The ministry had omitted RPs from the draft policy which is now in circulation for public comments, given that of 401 RPs issued during the 14-year period since 2001, only about 15 graduated to prospecting licences.

RPs as new mineral concession were introduced in 2001. As reported by FE earlier, the ministry is also considering to allow the amalgamation of leases held by any player which got the right through the earlier dispensation route.

A reconnaissance operation is defined as one undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical, or geo-chemical surveys and geological mapping. However, it excludes pitting, trenching, drilling or sub-surface excavation. The average exploration expenditure through RPs had been about R6,673 per sq km over the last 14 years. Thus, the expenditure per sq km per year works out to R477. This clearly showed that the objectives envisaged by the government through the instrument of RPs do not appear to have been achieved to the desired extent.


“We have many representations from the industry and associations that say that the government should restore the provision of RPs in the new exploration policy. That option is available and the government can explore. However, before we go for amendments, we want to explore the possibilities with some alternative options (to make the area attractive fro the private parties),” said mines secretary Balvinder on the sidelines of a CII summit in New Delhi.

The law provided that RPs would have a preferential right for obtaining a prospecting license initially, and a mining lease eventually in order to bring in private sector expertise, technology and resources into mineral exploration.

Hence, it has been deleted from the draft exploration policy.

The three options that the mines ministry is considering to attract the public sector in the exploration sector includes reimbursing the explorer agency the entire money it has put in for exploration, along with a 30% return on investment. Apart from this, it is also mulling to reserve the explored area for the public sector and giving the opportunity for the first right of refusal to the exploring agency for a possible joint venture with the public sector entity. The ministry wants industry representations on the probable models.

The industry was alleging that barring the RP policy, the exploration activity in the mining sector would suffer, purely because only exploration can take India into the big league in the mining space. The industry was of the view that the clause might be retained particularly for deep-seated minerals like diamond or gold where the investment is quite high. Almost 70% of the 401 RP licences granted for various commodities during the last 14 years are those for diamond and gold.

The baseline geo-science data generation carried out by GSI so far has resulted in identification of an area of nearly 0.57 million sq km of obvious geological potential (OGP) which needs to be explored on higher priority. Within the OGP, favorable areas for various mineral commodities have been demarcated — gold: 1,02,890 sq km; diamond & precious stones: 3,00,000 sq km; and base metals: 1,81,150 sq km, among others.

Do you know What is Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey, State Finance Commission? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.