Government to offer 100 large plots to Indian and global firms under new mining policy

The Indian government has made plans which if executed would transform the mining sector of the country. The new policy would offer global and Indian firms about 100 large plots for exploration of various minerals to explore, which would happen with a reverse auction, followed by another round of bidding to extract the ores.

In the first phase, companies will be bidding for royalty that they will get for minerals they discover and compensation for the expenditure occurred on exploration in case no commercial reserve is found in the block.

For the new minerals policy, the Indian mines ministry has already started inter-ministerial consultations, aimed at significantly expanding the exploration of minerals and attracting private capital for the sector, which would most likely also benefit the states.

Mines Secretary Balvinder Kumar responded to ET’s queries, and said that "the ministry has sought concurrence of states on the policy that is a win-win for central and state governments and private exploration agencies".

Under the policy, potential blocks would be identified and auctioned to explore agencies that are registered in India.

The government will also be conducting an online reverse auction among agencies that are tech-savvy. As per the process, the companies will quote share of royalty that accrue to state governments throughout the lease period of the mine after operations are started there.

Companies that seek lower share in the royalty will be announced as the winners of the blocks for exploration.

In case reserves are established after exploration, blocks will be auctioned to miners who will be paying royalty to the exploration agencies and state governments for 50 years of the mine life.

In case no reserves are found, the government will compensate mineral explorers. For that, normative cost of exploration works for different minerals will be worked out. For this compensation, a fund would be set up so that exploration activities are enhanced.