Government planning fresh mining exploration rules

The recently notified mineral auction rules have nothing on granting non-exclusive reconnaissance permit, required for preliminary exploration

The government is planning to bring fresh mining exploration rules separately, to encourage the sector.

The recently notified mineral auction rules — made according to the Mines and Minerals (Development and Regulation) Amendment Act, 2015 — have nothing on granting non-exclusive reconnaissance permit (NERP), required for preliminary exploration. The draft mineral auction rules, however, had proposed detailed rules for granting NERP.

The draft rules stated a firm cannot stake any claim for a mining licence (ML) or a composite licence (prospecting licence-cum-ML) nor can it ask for monetary incentive during auction, if it has information regarding mineral contents during exploration. The firm would have to submit the data with the state government concerned and request it to “conduct auction for grant of a composite licence or an ML based on such findings”.

NEED FOR CHANGE

• The recently notified mineral auction rules have nothing on granting non-exclusive reconnaissance permit (NERP), required for preliminary exploration
   
• The draft mineral auction rules, however, had proposed detailed rules for granting NERP
   
• Experts in the mineral exploration sector had severely criticised the rules pertaining to NERP
   
• Only 570,000 sq km of India’s land area of 3.28 million sq km has obvious geological potential

The draft rules also stated that the NERP holder would also need to pay Rs 1,000 a sq km for the area being explored.

A reconnaissance permit (RP) is granted for preliminary exploration through regional, aerial, geophysical or geochemical surveys and geological mapping. A prospecting licence (PL) is required for exploring, locating and proving mineral deposits. An ML is required to extract minerals.

Experts in the mineral exploration sector had severely criticised the rules pertaining to NERP.



“It is no use even to provide for reimbursement of expenses or to give a right of refusal to an exploration company,” said S Vijay Kumar, former secretary, mines ministry. “Exploration is a high-cost, high-risk business. Maybe out of 10 exploration ventures, one will lead to a mineral deposit. The system has to find a way to reimburse the expenses of failed ventures as well. Otherwise who will take the risk and spend millions of dollars? In fact, where will he raise capital?”

The internationally accepted system is to let the exploration company take all the risks and give it all the rewards. “In such a system, the company finds it possible to raise venture capital in exchanges that deal with such matters,” he added.

According to data shared by the ministry of mines, only 570,000 sq km of India’s land area of 3.28 million sq km has obvious geological potential.

Exploration work has been an insignificant part of the total area of the known mineral prospects and deposits. As of 2012, said the ministry, only 5,046 sq km was under mineral lease, less than one per cent of the obvious geological potential.