Govt unlikely to give any incentive for mineral exploration

Non-exclusive reconnaissance permit (NERP) holders are unlikely to get any monetary incentive or any relaxation during auctioning of mineral rights even if they find data at the exploration stage. "Rules regarding NERP are unlikely to be changed," said a senior government official. According to the proposed mineral auction rules under the Mines and Minerals (Development and Regulation) Amendment Act, 2015, or MMDR Amendment Act - the state government will have to grant NERP to any eligible company within 30 days of application.

However, the firm would not be able to stake any claim for a mining licence (ML) or a composite licence (PL-cum-ML) - nor can it ask for any kind of monetary incentive in return during the auction - in case it finds some data regarding mineral contents during exploration. The only option left with the firm would be 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".

"No expert exploration company will come with such provisions. Earlier, there was the provision that the RP holder, if he finds any data, will have the first right to apply for PL and then ML. The MMDR Amendment Act has deleted this provision and has thus removed the incentive," said Vijay Kumar, former mining secretary. According to the data shared by the ministry of mines, of a total land area of 3.28 million sq km, only 570,000 sq km has obvious geological potential. As of 2012, according to the ministry, only 5,046 sq km was under mineral lease, less than one per cent of the OGP.

The exploration work has been an insignificant part of the total area of the known mineral prospects and deposits. Under the proposed rules, if the state government has 'inadequate evidence of mineral contents' even after the first stage of exploration, it can directly initiate the auction process for the PL-cum-ML. There was no such provision of 'composite licence' in the earlier mining law.

On the other hand, if the state government has "adequate evidence of mineral contents" for the mine area concerned, it can directly go for ML auction.

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

The NERP holder would also need to pay a fee of Rs 1,000 a sq km for the area mentioned in the application. Moreover, such a company will have to report the discovery of any mineral - which has not been specified in NERP - to the state government within 60 days from the date of such finding.

"No company is here to do charity. Why will we put our money for exploration when we know we would not get anything in return?" asked a steel company executive, who did not wish to be named.

The grant of NERP will not prohibit the state government from notifying any part of such area for auction (ML or composite licence) of any mineral. "Upon any such notification, the validity of any NERP over such notified area will stand terminated," said the proposed rules said.