Page 9 - The Mineral Development and Regulation Framework in India (English Version)
P. 9
Discussion Paper
The issue on the best mode of disposal of natural There are a number of internationally well-
resources was taken to the Supreme Court in a Special established standards, the best known of which is
Reference [Special Reference No.1 of 2012; {(2012) the Australasian Code for Reporting of Exploration
10 SCC 1}] and the Constitution Bench in that case Results, Mineral Resources and Ore Reserves
had held that the alienation of natural resources is a (prepared by the Joint Ore Reserves Committee
policy decision and the means adopted for the same of the Australasian Institute of Mining and
are, thus, executive prerogatives. This Judgement has Metallurgy, Australian Institute of Geoscientists,
been cited in extenso in the Judgement dated August and Mineral Council of Australia and hence
25, 2014 in the Coal Mines Allocation case [WP {Crl.} commonly called ‘the JORC Code’), which is a
No.120 of 2012], where inter-alia it is stated, in Para professional code of practice that sets minimum
99, that, “in the light of the above legal position, the standards for Public Reporting of Exploration
argument that auction is the best way to select private Results, Mineral Resources, and Ore Reserves.
parties as per Article 39(b) does not merit acceptance.’’ The JORC Code provides a mandatory system for
The relevant extract is in Appendix 2. the classification of mineral exploration results,
mineral resources and reserves according to the
Resource estimation and valuation levels of confidence in the geological knowledge
for bidding at prospecting stage and technical and economic considerations. An
area at a level of exploration qualifying to be put to
In general, competitive processes for mineral bid for prospecting would generally be classified
concessions at prospecting stage can face several as an “advanced exploration area”.
difficulties depending on the nature of the minerals
likely to be involved: Independent valuation will also need to be
done to ensure effective bidding. There are a
Fully prospected ore bodies or substantially number of internationally accepted practices for
prospected bulk minerals like iron ore, the purpose, the best known of which perhaps
bauxite, limestone, beach sand minerals, is the Code for the Technical Assessment and
etc.: At prospecting stage, resource estimations Valuation of Mineral and Petroleum Assets
and valuations are generally uncertain, and the and Securities for Independent Expert Reports
justification for resorting to bidding is not as clear called the VALMIN Code (2005). The Code
as in the case of mining. On the one hand, at has been prepared by a Joint Committee of the
this stage, the extent of public funds spent on
exploration is relatively less. On the other hand,
the risk associated with prospecting still remains
and needs to be shouldered by the concessionaire.
As such, it may be preferable to retain the
provision for bidding only to “fully prospected
ore bodies” (for mining lease), as recommended
by the Hoda Committee. If in any other case,
competitive process is to be retained at all for
prospecting stage, for instance in the case of bulk
minerals where the mineral is well spread out and
the nature of the mineral deposit is relatively more
uniform and predictable, and where substantial
work may have been done by State Agency, the
resource estimation has to conform to standards
applicable for commercial purposes.
JANUARY 2015 9
The issue on the best mode of disposal of natural There are a number of internationally well-
resources was taken to the Supreme Court in a Special established standards, the best known of which is
Reference [Special Reference No.1 of 2012; {(2012) the Australasian Code for Reporting of Exploration
10 SCC 1}] and the Constitution Bench in that case Results, Mineral Resources and Ore Reserves
had held that the alienation of natural resources is a (prepared by the Joint Ore Reserves Committee
policy decision and the means adopted for the same of the Australasian Institute of Mining and
are, thus, executive prerogatives. This Judgement has Metallurgy, Australian Institute of Geoscientists,
been cited in extenso in the Judgement dated August and Mineral Council of Australia and hence
25, 2014 in the Coal Mines Allocation case [WP {Crl.} commonly called ‘the JORC Code’), which is a
No.120 of 2012], where inter-alia it is stated, in Para professional code of practice that sets minimum
99, that, “in the light of the above legal position, the standards for Public Reporting of Exploration
argument that auction is the best way to select private Results, Mineral Resources, and Ore Reserves.
parties as per Article 39(b) does not merit acceptance.’’ The JORC Code provides a mandatory system for
The relevant extract is in Appendix 2. the classification of mineral exploration results,
mineral resources and reserves according to the
Resource estimation and valuation levels of confidence in the geological knowledge
for bidding at prospecting stage and technical and economic considerations. An
area at a level of exploration qualifying to be put to
In general, competitive processes for mineral bid for prospecting would generally be classified
concessions at prospecting stage can face several as an “advanced exploration area”.
difficulties depending on the nature of the minerals
likely to be involved: Independent valuation will also need to be
done to ensure effective bidding. There are a
Fully prospected ore bodies or substantially number of internationally accepted practices for
prospected bulk minerals like iron ore, the purpose, the best known of which perhaps
bauxite, limestone, beach sand minerals, is the Code for the Technical Assessment and
etc.: At prospecting stage, resource estimations Valuation of Mineral and Petroleum Assets
and valuations are generally uncertain, and the and Securities for Independent Expert Reports
justification for resorting to bidding is not as clear called the VALMIN Code (2005). The Code
as in the case of mining. On the one hand, at has been prepared by a Joint Committee of the
this stage, the extent of public funds spent on
exploration is relatively less. On the other hand,
the risk associated with prospecting still remains
and needs to be shouldered by the concessionaire.
As such, it may be preferable to retain the
provision for bidding only to “fully prospected
ore bodies” (for mining lease), as recommended
by the Hoda Committee. If in any other case,
competitive process is to be retained at all for
prospecting stage, for instance in the case of bulk
minerals where the mineral is well spread out and
the nature of the mineral deposit is relatively more
uniform and predictable, and where substantial
work may have been done by State Agency, the
resource estimation has to conform to standards
applicable for commercial purposes.
JANUARY 2015 9
