Page 11 - The Mineral Development and Regulation Framework in India (English Version)
P. 11
Discussion Paper
concession instruments (reconnaissance licenses, of non-exclusivity for reconnaissance work will be
prospecting license, and mining leases) transferable. adopted. At the same time to attract large investment
The world over, it has been the consistent experience and high technology, a new instrument to be known as
that facilitating quick and easy transfer is the key to Large Area Prospecting License will be introduced …”
increasing turnover rate for exploration area, which
is crucial to improving the chances of discovery of Para 7.8: “… Prospecting being a high risk venture,
mineral deposits by one or the other concessionaires. access to ‘risk funds’ from capital markets and venture
Mining lease transfers will also help develop better funds will be facilitated. Early stage exploration and
resource estimation and knowledge on valuation mining companies will be encouraged … Induction
methodologies for mineral resources, which is a grey of foreign technology and foreign participation in
area in the country, and help create a well regulated exploration and mining for high value and scarce
market and a Mergers and Acquisitions industry, minerals will be pursued. Foreign equity investment
which will drive efficiency in mining operations, in joint ventures for exploration and mining promoted
including beneficiation of low grades and recovery of by Indian Companies will be encouraged.”
minor metals.
Para 8: “… A long-term export policy would provide
On transfer, the rights and liabilities including rights stability and prove to be an incentive for investing in
to the data are also transferred to the transferee. This large-scale commercial mining activity. To develop
has two advantages. First, it allows a highly specialized or mining as a modern stand alone industry, substantial
less risk-taking company or a specific mineral-oriented investment is required. Assurance on export of
company to take over a promising area as a ‘late stage’ minerals will be a key factor for investment decisions
exploration enterprise, thus incentivizing efficiency. particularly on FDI in the sector….”
Second, it also allows a specialized high risk-taking
exploration company (perhaps with little expertise in Clearly, the mineral concession system must be
mining) to sell the mining rights to a mining company, oriented towards facilitating the private sector in
and move on to other exploratory ventures. This in fact general and FDI in particular.
is the model of Junior Exploration Companies (Juniors),
which is responsible for most mineral discoveries in Ensuring Resource Security:
Canada in the last two decades and has been approvingly Exploration is the key
cited by the Hoda Committee in its Report.
Most attention with regard to exploitation of
Private sector and exploration natural resources tends to focus on mining
activities, since the revenue generation and issues
The key prescriptions in the National Mineral Policy of environmental degradation are manifested
2008 regarding incentivizing of private sector to there. The exploration process is rarely given the
undertake exploration are as follows: importance it deserves, not least on the simplistic
logic that incentivizing exploration may only increase
Para 5.2: “While the Government agencies will the extent of unsustainable mining. In actual fact,
continue to perform the tasks assigned to them for scientific exploration enables better understanding
exploration and survey, the private sector will be of the potential availability of resources and their
the main source of investment in reconnaissance geographical spread, enabling informed choice of
and exploration and government agencies will locations for mining with least adverse impacts in
expend public funds primarily in areas where private the context of the requirements of resource and
sector investments are not forthcoming despite energy security.
the desirability of programmes due to reasons such
as high uncertainties. To expedite completion of In the Indian context, where the industry is still
reconnaissance as early as possible, an open sky policy mainly engaged in picking the low-hanging fruit
JANUARY 2015 11
concession instruments (reconnaissance licenses, of non-exclusivity for reconnaissance work will be
prospecting license, and mining leases) transferable. adopted. At the same time to attract large investment
The world over, it has been the consistent experience and high technology, a new instrument to be known as
that facilitating quick and easy transfer is the key to Large Area Prospecting License will be introduced …”
increasing turnover rate for exploration area, which
is crucial to improving the chances of discovery of Para 7.8: “… Prospecting being a high risk venture,
mineral deposits by one or the other concessionaires. access to ‘risk funds’ from capital markets and venture
Mining lease transfers will also help develop better funds will be facilitated. Early stage exploration and
resource estimation and knowledge on valuation mining companies will be encouraged … Induction
methodologies for mineral resources, which is a grey of foreign technology and foreign participation in
area in the country, and help create a well regulated exploration and mining for high value and scarce
market and a Mergers and Acquisitions industry, minerals will be pursued. Foreign equity investment
which will drive efficiency in mining operations, in joint ventures for exploration and mining promoted
including beneficiation of low grades and recovery of by Indian Companies will be encouraged.”
minor metals.
Para 8: “… A long-term export policy would provide
On transfer, the rights and liabilities including rights stability and prove to be an incentive for investing in
to the data are also transferred to the transferee. This large-scale commercial mining activity. To develop
has two advantages. First, it allows a highly specialized or mining as a modern stand alone industry, substantial
less risk-taking company or a specific mineral-oriented investment is required. Assurance on export of
company to take over a promising area as a ‘late stage’ minerals will be a key factor for investment decisions
exploration enterprise, thus incentivizing efficiency. particularly on FDI in the sector….”
Second, it also allows a specialized high risk-taking
exploration company (perhaps with little expertise in Clearly, the mineral concession system must be
mining) to sell the mining rights to a mining company, oriented towards facilitating the private sector in
and move on to other exploratory ventures. This in fact general and FDI in particular.
is the model of Junior Exploration Companies (Juniors),
which is responsible for most mineral discoveries in Ensuring Resource Security:
Canada in the last two decades and has been approvingly Exploration is the key
cited by the Hoda Committee in its Report.
Most attention with regard to exploitation of
Private sector and exploration natural resources tends to focus on mining
activities, since the revenue generation and issues
The key prescriptions in the National Mineral Policy of environmental degradation are manifested
2008 regarding incentivizing of private sector to there. The exploration process is rarely given the
undertake exploration are as follows: importance it deserves, not least on the simplistic
logic that incentivizing exploration may only increase
Para 5.2: “While the Government agencies will the extent of unsustainable mining. In actual fact,
continue to perform the tasks assigned to them for scientific exploration enables better understanding
exploration and survey, the private sector will be of the potential availability of resources and their
the main source of investment in reconnaissance geographical spread, enabling informed choice of
and exploration and government agencies will locations for mining with least adverse impacts in
expend public funds primarily in areas where private the context of the requirements of resource and
sector investments are not forthcoming despite energy security.
the desirability of programmes due to reasons such
as high uncertainties. To expedite completion of In the Indian context, where the industry is still
reconnaissance as early as possible, an open sky policy mainly engaged in picking the low-hanging fruit
JANUARY 2015 11
