New offshore-mining regulations allow lease surrender after 10 years

Paving the way for India’s first offshore mineral auction, the Centre has notified the Offshore Areas Operating Right Rules, 2024, aimed at regulating the exploration and production of minerals in offshore regions. To make offshore mining more viable, the new rules allow lessees to surrender their entire lease area after 10 years if production operations are deemed uneconomical.

Published on October 17, the rules have taken immediate effect, outlining the procedures for obtaining operating rights and managing mineral resources in specified offshore zones.

The Federation of Indian Mineral Industries (FIMI) welcomed the move, noting that it marks significant progress since the Offshore Areas Mineral (Development and Regulation) Act of 2002. “Allowing the option to return the lease if it becomes non-viable is a step that will boost industry confidence. This should also be implemented in onshore mining,” said B K Bhatia, additional secretary general of FIMI.

The announcement comes as India prepares to launch its first-ever offshore mineral auction, with 10 blocks available. Mines Secretary V L Kantha Rao noted in September, “We are ready with 10 blocks on both the East and West coasts of India. These blocks will include sand, lime mud, and polymetallic nodules.”

Under the new rules, offshore areas will be made available for mineral exploration and production only after being notified in the Official Gazette by the administering authority.

The rules provide priority access to these areas for the government, government-owned companies, or corporations when it comes to securing operating rights for reserved offshore zones.

The rules specify the lease durations for different entities. Production leases granted to government entities will have a tenure of 50 years, while composite licences, allowing exploration and production activities, will be valid for three years. Private entities can also gain access to exploration and production leases through a competitive auction process.

To bring transparency in mining, lessees will be required to report any mineral discoveries not included in their original production lease within 60 days of the find.

Additionally, they are prohibited from extracting or disposing of these newly discovered minerals unless they have updated their production lease deed to include them.

The introduction of these rules is aimed at ensuring a structured approach to mineral exploration in offshore areas while maintaining transparency and compliance with regulatory frameworks.