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Business News/ Economy / Composite mine licences to attract pvt investments soon
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Composite mine licences to attract pvt investments soon

Govt to grant single exploration licence to scout for gold, silver, platinum and copper.

There is no provision for a licence for undertaking a full range of exploration, from reconnaissance to prospecting. (Bloomberg)Premium
There is no provision for a licence for undertaking a full range of exploration, from reconnaissance to prospecting. (Bloomberg)

New Delhi: The government is planning to grant composite exploration licences for valuable but hard-to-locate minerals such as gold, silver, platinum and copper as it seeks to attract more private investment in mining.

According to persons aware of the development, the mines ministry has moved draft amendments to the Mines and Minerals (Development and Regulation) Act, proposing a single exploration licence for specialised mineral exploration companies to conduct reconnaissance, prospect mines and earn revenue from its discovery after the mine is put to auction for miners.

At present the MMDR Act provides for two types of minerals concessions to private entities through auction — a lease for mining operations and a composite licence for undertaking prospecting operations followed by mining.

There is no provision for a licence for undertaking a full range of exploration, from reconnaissance to prospecting.

The composite exploration licence will likely give more play to stand-alone specialised mining companies, making them a partner in mining activities with a revenue-share arrangement.

The changes in the licence regime are part of broad reforms being considered by the government to push India’s mineral security. The changes would make exploration of deep-seated minerals, which are difficult to locate and explore, attractive for private investment and bring technologies that could improve the prospect of minerals in the country, said the one of the persons quoted above.

As part of new exploration licence, private explorers will be rewarded with a share in the revenue from the premium received by the government on auctions of explored blocks for mining. The move is to attract junior mining companies with the relevant expertise in exploration of these minerals that till now were being explored only by government agencies such as the Geological Survey of India (GSI).

World over, exploration of deep-seated minerals is done by junior mining companies who get rights over a large area on the basis of available baseline survey data to explore the area from reconnaissance stage and bring it up to the level required for starting mining operations. They are allowed to transfer the mineral concession in full or part during the exploration period or at the conclusion of exploration.

“The new licensing regime is expected to get Parliamentary approval during the monsoon session after the draft is finalised once the stakeholder consultation process is over," said this person.

Queries sent to the ministry of mines remained unanswered till press time.

Exploration of deep-seated minerals is important for India as it would establish country’s prominence over some of these high-value and multiple-use minerals. Deep-seated minerals such as gold, silver, copper, zinc, lead, nickel, cobalt, platinum group of minerals, diamonds, etc. are high-value minerals.

It Is difficult and expensive to explore and mine these minerals as compared to surfacial bulk minerals. They are critical for new age electronics, transition to clean energy (solar, wind, electric vehicles) as well as in traditional sectors like infrastructure, defence, etc. Resource identification for these minerals in the country is very limited as compared to surfacial/bulk minerals. Resultantly, the share of deep-seated minerals in total mineral production is meagre, forcing dependence on imports.

India has 6.88 lakh sq.km. of Obvious Geological Potential areas, out of which only about 197,000 sq.km. high potential area has been identified by the GSI.

Also, currently around only 1% of the global exploration budget is spent in India making this activity extremely sluggish despite vast resource base of the country.

The proposed new exploration licence would be granted through auction only for certain deep-seated and critical minerals such as copper, tellurium, selenium, lead, zinc, cadmium, indium, gold, silver, diamond, rock phosphate, apatite, potash, elements of the rare earth group and critical and strategic minerals such as lithium, cobalt, molybdenum, rhenium, tungsten, graphite, vanadium, nickel, tin, platinum group of elements, columbite, tantalite, lepidolite, scheelite, casseterite, etc.

Under the new licence, it is proposed that maximum area for a concessionaire would be 1000 sq.km while maximum area limit for a person to acquire the licence would be 5000 sq.km. The bid criteria would be percentage revenue share that holder of EL would take from auction premium payable by the lessee of such area to the State Government on its successful auction for mining lease. The bidder quoting lowest percentage bid shall be preferred bidder for EL.

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ABOUT THE AUTHOR
Subhash Narayan
Subhash is the infrastructure editor at Mint and tracks the momentous developments taking place in the space that is fast changing the Indian landscape. He feels that reporting has been a passion that provides the necessary adrenaline rush and keeps you going.
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Published: 01 Mar 2023, 11:38 PM IST
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