Page 7 - Why we need a New Mineral Exploration Policy for National Mineral Security?
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Discussion Paper
further momentum to exploration efforts. The Policy really exploitable for technical or commercial reasons.
purports to: Currently, the capacity of these public agencies is severely
limited in terms of geoscientific and technical resources.
Permit the engagement of private agencies to carry Substantial investments (including financial equity in the
out exploration work in identified blocks/areas with case of PSUs and budget support in other cases) will
the right to a certain share in the revenue (by way of have to be made to build up capacity to conduct detailed
a certain percentage of royalty/premium) accruing exploration and efficiently use modern technology to
to State Government throughout the lease period, locate concealed mineral deposits. Mineral exploration
with transferable rights. The Policy states that this for concealed or deep-seated minerals also requires
percentage/amount will be paid by the successful substantial multidisciplinary expertise that can only be
bidder to the concerned exploring agency and will built up over time.
be determined when mineral blocks on the basis of
successful exploration are put on e-auction; Though the Policy is still in the process of being rolled
out and “Expressions of Interest” from private agencies
Promote revenue sharing, which could be either have been invited, there are clearly several issues that
in the form of a percentage of royalty/premium need deeper consideration:
for the concession period (of 50 years) or a lump
sum amount, to be calculated on the basis of the The exploration work of the private agencies is
net present value of that share of royalty/premium not covered by the current legislative framework
to be accrued during the lease period. The Policy which provides for an NERP. Presumably the
also indicates that these exploration agencies will agencies will be notified under the second
be allowed to participate in e-auctioning when proviso to Section 4 of the MMDR Act, which, for
mineral blocks after successful exploration are put the purpose of an exploration licence, earlier
on auction; and exempted the Geological Survey of India, the
Indian Bureau of Mines (IBM), the Atomic Minerals
Move towards working out normative cost of Directorate (AMD) of the Department of Atomic
exploration for different kinds of minerals so that Energy of the Central Government, the Directorates
the exploration agencies could be compensated, in of Mining and Geology of the State Governments,
case they do not discover any mineable reserves in and the Mineral Exploration Corporation Limited
their respective areas. This is seen to be an added (MECL), and has been amended in 2015 so as to
incentive for exploration agencies to mitigate exempt any other “entity” notified for the purpose.
their risk. However, this may imply that the agencies will not
be subject to the direct regulatory control of the IBM
The intention of the Policy is that the preliminary work will in terms of the Mineral Concession Rules 1960 and
be done by public agencies (and their private nominees) the Mineral Conservation and Development Rules
so that the data gathered can be used to auction any 2017 (replacing the earlier Rules of 1988), as would
mineral occurrences, and thus maximize revenues. be the case with a concessionaire.
The National Mineral Exploration Policy in paragraph
15.1 states that: “State Governments have a key role to The agency is sought to be compensated in two
play in building up a steady stream of auctionable mineral ways; a normative cost will be worked out and the
prospects. They will have to take up mineral exploration agencies compensated (presumably out of the Trust
reports prepared by the GSI or other agencies and build funds) in case they do not make a find. In case they
on them to complete G3 or G2 level of exploration. States do make a find, they will share part of the revenue
also need to build up the exploration capabilities of their accruing to the State Government from the auction.
staff. The Central Government will have to provide suitable In fact their selection as a partner would be on
incentives to expedite this process. Capacity building of the basis of their bid in this respect. This is clearly
States will be supported by the NMET.” a very substantial incentive, and may incentivize
“Juniors” in case the block for exploration is large
Ensuring that mineral finds are explored to G3
or, better still, G2 levels require substantial ground- enough to make it worth their while.
level work and expenditure, with the attendant risk
of infructuous expenditure, in case the find is not The provision that such agencies may also bid in
the auction itself, however, raises many issues,
JUNE 2017 7
further momentum to exploration efforts. The Policy really exploitable for technical or commercial reasons.
purports to: Currently, the capacity of these public agencies is severely
limited in terms of geoscientific and technical resources.
Permit the engagement of private agencies to carry Substantial investments (including financial equity in the
out exploration work in identified blocks/areas with case of PSUs and budget support in other cases) will
the right to a certain share in the revenue (by way of have to be made to build up capacity to conduct detailed
a certain percentage of royalty/premium) accruing exploration and efficiently use modern technology to
to State Government throughout the lease period, locate concealed mineral deposits. Mineral exploration
with transferable rights. The Policy states that this for concealed or deep-seated minerals also requires
percentage/amount will be paid by the successful substantial multidisciplinary expertise that can only be
bidder to the concerned exploring agency and will built up over time.
be determined when mineral blocks on the basis of
successful exploration are put on e-auction; Though the Policy is still in the process of being rolled
out and “Expressions of Interest” from private agencies
Promote revenue sharing, which could be either have been invited, there are clearly several issues that
in the form of a percentage of royalty/premium need deeper consideration:
for the concession period (of 50 years) or a lump
sum amount, to be calculated on the basis of the The exploration work of the private agencies is
net present value of that share of royalty/premium not covered by the current legislative framework
to be accrued during the lease period. The Policy which provides for an NERP. Presumably the
also indicates that these exploration agencies will agencies will be notified under the second
be allowed to participate in e-auctioning when proviso to Section 4 of the MMDR Act, which, for
mineral blocks after successful exploration are put the purpose of an exploration licence, earlier
on auction; and exempted the Geological Survey of India, the
Indian Bureau of Mines (IBM), the Atomic Minerals
Move towards working out normative cost of Directorate (AMD) of the Department of Atomic
exploration for different kinds of minerals so that Energy of the Central Government, the Directorates
the exploration agencies could be compensated, in of Mining and Geology of the State Governments,
case they do not discover any mineable reserves in and the Mineral Exploration Corporation Limited
their respective areas. This is seen to be an added (MECL), and has been amended in 2015 so as to
incentive for exploration agencies to mitigate exempt any other “entity” notified for the purpose.
their risk. However, this may imply that the agencies will not
be subject to the direct regulatory control of the IBM
The intention of the Policy is that the preliminary work will in terms of the Mineral Concession Rules 1960 and
be done by public agencies (and their private nominees) the Mineral Conservation and Development Rules
so that the data gathered can be used to auction any 2017 (replacing the earlier Rules of 1988), as would
mineral occurrences, and thus maximize revenues. be the case with a concessionaire.
The National Mineral Exploration Policy in paragraph
15.1 states that: “State Governments have a key role to The agency is sought to be compensated in two
play in building up a steady stream of auctionable mineral ways; a normative cost will be worked out and the
prospects. They will have to take up mineral exploration agencies compensated (presumably out of the Trust
reports prepared by the GSI or other agencies and build funds) in case they do not make a find. In case they
on them to complete G3 or G2 level of exploration. States do make a find, they will share part of the revenue
also need to build up the exploration capabilities of their accruing to the State Government from the auction.
staff. The Central Government will have to provide suitable In fact their selection as a partner would be on
incentives to expedite this process. Capacity building of the basis of their bid in this respect. This is clearly
States will be supported by the NMET.” a very substantial incentive, and may incentivize
“Juniors” in case the block for exploration is large
Ensuring that mineral finds are explored to G3
or, better still, G2 levels require substantial ground- enough to make it worth their while.
level work and expenditure, with the attendant risk
of infructuous expenditure, in case the find is not The provision that such agencies may also bid in
the auction itself, however, raises many issues,
JUNE 2017 7
