A costly affair: Draft National Mineral Policy dashes hopes of investments

Even after recast of its decade old National Mineral Policy (NMP), the Mines ministry can hardly expect to garner major private investments in mineral exploration space, say industry stakeholders.

The ministry has released the draft of the NMP-2018, seeking to replace the last policy announced in 2008.

According to the policy, mineral exploration would be incentivised to attract private investments as well as state of the art technology through an adequate financial package or through the Right of First Refusal at the time of auction. The policy also promises any other appropriate incentive as per international practice. While the government agencies would carry on exploration and survey work as usual, the private sector would be incentivised to take up exploration activities. In areas where private sector investments are not coming in due to high uncertainties, the government agencies would spend public funds, the policy says.

"The policy vaguely talks of some financial package. There is no clarity on the actual fiscal incentives that would be made available to a potential investor. Mineral exploration being a risky business, no big investor would bet his money amid uncertainties. Moreover, the policy has no provisions of transfers of mineral concessions as is the standard practice in other mineral rich nations", said a mining industry source.

India is one of the least explored countries in the world with an exploration spend of $15-20 million annually. This pales into insignificance with other resource rich nations like Canada and Australia which invest above $900 million every year on exploration. Unlike India where the taxpayers' money is deployed for mineral exploration, developed countries like Australia, Canada, Chile, USA, Brazil and Argentina invite junior companies who have expertise in exploration and are willing to take the risks associated with exploration which is an unpredictable and highly risky venture. In these countries, the local governments allow the junior exploration companies to sell their data which allows them to defray the costs and losses incurred in exploration.

"To attract private investment, the reconnaissance permit holders should be given the first right of refusal for PL (prospecting license) and ML (mining lease). More thrust should be given on exploration of minerals like diamond, gold, nickel, cobalt which are being imported and also for such minerals which have good export market but not much demand in the country", said Manish Kharbanda, executive director and Group head (mines & minerals) at Jindal Steel & Power Ltd (JSPL).
 

"For minerals like coal, iron ore, limestone and bauxite, the PL should be converted into ML if there is evidence of presence of mineral", he suggested.

The draft NMP, 2018 admits to the country's constraints in mineral exploration. "Particular attention will be given to the prospecting and exploration of minerals in which the country has a poor resource cum reserve base despite having the geological potential for large resources. Special attention will be given towards exploration of energy critical minerals, fertilizer minerals, precious metals & stones and strategic minerals which are otherwise difficult to access and for which the country is mainly dependent on imports", the policy stated.