To make exploration more attractive for private players, the Union government will reimburse the costs to mining firms that fail to find adequate mineral wealth and offer them a share of the revenue from blocks where they do strike valuable reserves.
However, the exploration firms will not enjoy any preferential right to the blocks where they find viable mineral reserves or be eligible for direct compensation from firms that end up operating the mines they discover, as was earlier envisaged.
The Union Ministry of Mines has set forth these ideas in the final Cabinet note on the new mineral exploration policy, which was circulated for inter-ministerial consultations this week.
“Under the Mines and Mineral (Development and Regulations) Act of 2015, reconnaissance permits cannot be converted into a prospecting licence or a mining licence, though there was a provision for that in the earlier law,” Mines Secretary Balvinder Kumar told The Hindu .
“So, there would have been no guarantee that a player will get anything out of exploration,” he said
Mr. Kumar was explaining why the models that were considered earlier — such as granting the right of first refusal to explorers for forming a mining joint venture with public sector firms to tap blocks where they find reserves — seemed out of sync with the spirit of the new law that mandated auctions for all mineral block allocations.
“So now we are saying if we give you a reconnaissance permit and you manage to find something, you will be paid a certain percentage of the revenue throughout the 50-year period of the mining lease,” he said.
The Geological Survey of India has identified 108 blocks in 23 States that can be taken up for mineral exploration, once the Cabinet approves the new policy. The comments of the Ministries on the proposal are expected by the first week of May.
The reconnaissance permits for exploration would be awarded through auctions, but incentives were necessary to attract serious bids, Mr. Kumar said.
From 2001 to 2015, 405 reconnaissance permits were granted for mineral exploration, but just 15 of these permits translated into a mining lease or prospecting licence.
