Metals & Mining News

Mining industry flags issues with India’s mineral exploration regime


India needs to bring further reforms to encourage mineral exploration in the country according to Sumit Deb, outgoing President of the Federation of Indian Mineral Industries (FIMI). In his address during the 57th annual session of FIMI, he expressed doubts whether international Junior Exploration Companies or domestic exploration companies would be keen to participate in the auctioning of exploration licenses under the proposed regime.

“We feel that the amended Mines and Minerals (Development and Regulation) Act, 2023 may not achieve the desired objective of establishing the required resources of much needed deep-seated and critical minerals,” Deb said.

He noted that there is a need to revisit the mineral concession policy and to adopt conducive framework in line with international practices. Under the proposed regime, concept of exploration licence (EL) has also been introduced in the amended MMDR Act which will be granted through auctions for undertaking reconnaissance and prospecting for critical and deep seated minerals.

“As per the consultation paper circulated by Ministry of Mines, the auctioning of exploration license will be based on the reverse bidding where the bidder has to quote percentage revenue share that holder of Exploration License (EL) will get as payable by the successful lessee after the auctioning of explored mineral block for mining lease over a period of 50 years,” Deb said.
He noted that this modus operandi and mechanism for grant of exploration license and mining lease are not as per the prevailing international best practices being adopted by the mineral rich countries like Australia, Canada and South Africa.According to him, there are doubts whether international Junior Exploration Companies or domestic exploration companies would be keen in participating in the auctioning of exploration licenses. “This is because of the fact that there is no incentive or reward for an explorer and the uncertainty involved with regard to returns on their very high investments. Moreover even if the explorer is able to get success in establishing the resources, the returns would be payable in terms of percentage of premium to be paid by the successful lessee over a period of 50 years,” he said.Deb also pointed out that more than 8.5 years have passed since the auction regime was introduced for grant of mineral concessions. “This mechanism has not been able to deliver the desired results for the faster development and harnessing of mineral resources,” he said.According to Deb, subsequent to implementation of MMDR Amendment Act in January, 2015, 155 greenfield non-coal mineral blocks have been auctioned but only seven blocks have come to a stage of mine development or production. Further, out of the 79 mineral blocks auctioned for composite licenses, prospecting licenses have been issued in just three cases.


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