Shares of twelve metal and mining companies rose 0.68% to 20% at 15:05 IST on BSE after reports suggested that the Union Cabinet cleared National Mineral Exploration Policy (NMEP).
Meanwhile, the S&P BSE Sensex was up 232.71 points or 0.88% at 26,757.26.
JSW Steel (up 1.1%), Bhushan Steel (up 2.49%), Hindustan Copper (up 2.64%), Vedanta (up 3.41%), Hindalco Industries (up 1.65%), Hindustan Zinc (up 2.91%), Jindal Steel & Power (up 0.68%), Tata Steel (up 1.22%), Steel Authority of India (Sail) (up 1.63%), National Aluminum Company (up 0.84%) and NMDC (up 2.12%) gained.
Shares of gold miner Deccan Gold Mines hit 20% upper circuit at Rs 49.05.
As per reports, the National Mineral Exploration Policy (NMEP) today, 29 June 2016 got the Cabinet approval, paving the way for auction of 100 prospective mineral blocks and boosting the country's mining potential.
NMEP will allow private companies to carry out stand-alone exploration for the first time and help auction prospective mineral blocks. The blocks that will go on sale are among 100 mineral zones identified by the state-run Geological Survey of India following an aero geophysical assessment. India is keen to get private firms to start exploring for more minerals like diamonds and gold, where mining is negligible
To encourage mineral exploration in the country, the Mines Ministry has already notified the National Mineral Exploration Trust (NMET). Through NMEP, the government wants to attract private sector in exploration. States will also play a greater role by referring exploration projects, which can be taken up through NMET.
NMEP has reportedly proposed that private entities engaged in carrying out regional and detailed exploration would get a certain share in revenue (by way of royalty or premium accruing to the state government) in mining operation from the successful bidder after the e-auction of the mineral block. The revenue-sharing could be either in the form of a lumpsum or an annuity, to be paid throughout the period of mining lease with transferable rights.
Selection of private explorer is proposed to be done through a transparent process of competitive bidding through e-auction. For this, reasonable areas or blocks for regional exploration will be earmarked or identified by the government for auctioning.
The BSE Metal index had outperformed the market over the past one month till 28 June 2016, gaining 7.97% compared with Sensex's 0.48% fall. The index had also outperformed the market in past one quarter, gaining 12.96% as against Sensex's 6.24% gains.
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