Page 1 - Why we need a New Mineral Exploration Policy for National Mineral Security?
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DISCUSSION PAPERD i s c u s s i o n P a p e r June 2017
The Energy and Resources Institute
Why we need a New
Mineral Exploration
Policy for National
Mineral Security
CONTENTS Summary
Introduction Continuous exploration to locate new mineral deposits with
Exploration as part of the larger strategy regularity is the key to mineral resource security. Mineral concession
systems must start by optimizing this end of the process. Exploration
of mineral development constitutes a high-risk activity given the apparent randomness of
Global exploration trends mineral occurrences and the uncertainties in locating minerals hidden
National Mineral Policy 2008: Changes to the beneath the earth’s surface. Exploration success depends on the
use of the latest technologies to generate and use multidisciplinary
enabling environment datasets, and calls for specialization and expertise. As is the case
National Mineral Policy 2008: Changes to the internationally, the private sector should be incentivized to be the
main source of funding of exploration, given the high risks involved
legislative framework for exploration particularly in the case of deep exploration. Needless to say, there are
National Mineral Exploration Policy (NMEP) 2016 intrinsic difficulties in discharging accountability for judiciously using
Transparency in exploration substantial public funds over long periods in such high-risk situations.
Regulation of exploration activity The model of incentivizing “Junior” exploration companies funded
“Exploring in India” for “Making in India” by venture capital has worked well in advanced mining jurisdictions,
R&D to take exploration results forward such as Canada and Australia. The amendments made in 2015 to the
Conclusion Mines and Minerals (Development and Regulation) Act make auctions
Appendix the only method of allocation of mineral concessions at prospecting
Bibliography and mining stages and it is left mainly to State Agencies to conduct
Abbreviations the preliminary exploration. Auctioning of mineral concessions, while
removing arbitrariness and “discretion”, also removes the incentives
AUTHORS for the private sector to spend huge sums to conduct exploration
since they will not get the mining rights in case of success. As the
S Vijay Kumar Supreme Court in its Opinion dated September 27, 2012, on
Distinguished Fellow, TERI a Reference by the President of India under Article 143(1) of the
Constitution has opined, auction is not the only (or even the best)
Swati Ganeshan way of discharging a public trust in alienating natural resources, and
Fellow, TERI in the case of minerals, “a fortiori, besides legal logic, mandatory
auction may be contrary to economic logic as well”.
The Energy and Resources Institute
Darbari Seth Block, IHC Complex,
Lodhi Road, New Delhi- 110 003
Tel. 2468 2100 or 4150 4900
Fax. 2468 2144 or 2468 2145
India +91 Delhi (0) 11
www.teriin.org
The Energy and Resources Institute
Why we need a New
Mineral Exploration
Policy for National
Mineral Security
CONTENTS Summary
Introduction Continuous exploration to locate new mineral deposits with
Exploration as part of the larger strategy regularity is the key to mineral resource security. Mineral concession
systems must start by optimizing this end of the process. Exploration
of mineral development constitutes a high-risk activity given the apparent randomness of
Global exploration trends mineral occurrences and the uncertainties in locating minerals hidden
National Mineral Policy 2008: Changes to the beneath the earth’s surface. Exploration success depends on the
use of the latest technologies to generate and use multidisciplinary
enabling environment datasets, and calls for specialization and expertise. As is the case
National Mineral Policy 2008: Changes to the internationally, the private sector should be incentivized to be the
main source of funding of exploration, given the high risks involved
legislative framework for exploration particularly in the case of deep exploration. Needless to say, there are
National Mineral Exploration Policy (NMEP) 2016 intrinsic difficulties in discharging accountability for judiciously using
Transparency in exploration substantial public funds over long periods in such high-risk situations.
Regulation of exploration activity The model of incentivizing “Junior” exploration companies funded
“Exploring in India” for “Making in India” by venture capital has worked well in advanced mining jurisdictions,
R&D to take exploration results forward such as Canada and Australia. The amendments made in 2015 to the
Conclusion Mines and Minerals (Development and Regulation) Act make auctions
Appendix the only method of allocation of mineral concessions at prospecting
Bibliography and mining stages and it is left mainly to State Agencies to conduct
Abbreviations the preliminary exploration. Auctioning of mineral concessions, while
removing arbitrariness and “discretion”, also removes the incentives
AUTHORS for the private sector to spend huge sums to conduct exploration
since they will not get the mining rights in case of success. As the
S Vijay Kumar Supreme Court in its Opinion dated September 27, 2012, on
Distinguished Fellow, TERI a Reference by the President of India under Article 143(1) of the
Constitution has opined, auction is not the only (or even the best)
Swati Ganeshan way of discharging a public trust in alienating natural resources, and
Fellow, TERI in the case of minerals, “a fortiori, besides legal logic, mandatory
auction may be contrary to economic logic as well”.
The Energy and Resources Institute
Darbari Seth Block, IHC Complex,
Lodhi Road, New Delhi- 110 003
Tel. 2468 2100 or 4150 4900
Fax. 2468 2144 or 2468 2145
India +91 Delhi (0) 11
www.teriin.org
