Govt: No monetary incentives for mineral exploration

The government has decided not to give any kind of monetary incentive or relaxation concerning mineral rights to the owners of non-exclusive reconnaissance permit (NERP) – which is required for preliminary mineral exploration – in case he finds some data.

According to the recently notified Mineral (NERP) Rules, 2015, the NERP holder will have to submit the data with the state government so that the latter can initiate the auction process for mining licence (ML) or composite licence (prospecting licence-cum-ML).

The state governments will be auctioning the mine for composite licence in case G3 level exploration has been done by NERP holder. A mining lease can be auctioned only after G2 level exploration.

GROUNDBREAKING

• According to recently notified NERP Rules, the holder will have to submit the data with the state government so  that auction-processes can be initiated for mining licence (ML) or composite licence
   
• The state governments will be auctioning the mine for composite licence in case G3 level exploration has been done by NERP holder
   
• The rules state that the NERP holder shall not be entitled to make any claim for such composite licence or ML on the basis of NERP
   
• The Centre has renewed its focus on exploration as India’s explored area is minuscule to its obvious geological potential (OGP)

The rules explicitly state that the NERP holder shall not be entitled to make any claim for such composite licence or ML on the basis of NERP.

Earlier, there was the provision that the RP holder, if he finds any data, will have the first right to apply for prospecting licence and then ML.

Moreover, the rules are silent on reimbursing these holders financially for the money spent on exploration.

“Not many people will spend money in exploring unknown areas, when the chance of getting a return is much less than even in the past (when they could at least get prospecting and mining rights),” said S Vijay Kumar, former mining secretary.

“I cannot imagine DeBeers or Rio Tinto spending millions of dollars, and handing the data to, say, the state government of Chhattisgarh, and asking them to conduct an auction for the diamond prospect they may have found!” he added.

The Centre has renewed its focus on exploration as India’s explored area is minuscule to its obvious geological potential (OGP).

Consequently, as the state governments do not have good quality mineral data at present, they are worried that they will not get good prices during auction.

According to the data shared by the ministry of mines, of a total land area of 3.28 million sq km, around 570,000 sq km has OGP.

As of 2012, according to the ministry, only 5,046 sq km was under mineral lease, less than one per cent of the OGP. Earlier, the government had brought the rules regarding NERP in the draft Mineral (Auction) Rules, 2015.

However, the final auction rules did not have any mention of NERP as the government needed more time for discussion.

Now, the government has separately notified the Mineral (NERP) Rules, 2015, which are not much different to the ones proposed in the draft auction rules.

Apart from focusing on NERP, the central government has also introduced draft rules for setting up of National Mineral Exploration Trust (NMET) for which the miners would be paying an amount equivalent to two percent of royalty paid to the government.

The government has also notified some of its companies for exploration work. “Apart from NMDC and MECL, we have appointed central public sector undertakings such as SAIL, RINL, KIOCL and MIOL as well as state PSUs from Chhattisgarh and Madhya Pradesh for exploration work. We are increasing exploration with their help. If there is better data available, even states will get more revenue in auctions,” Union Mines Minister Narendra Singh Tomar had said earlier in an interview to Business Standard.