New Delhi: The Center is set to take over the auction of exploration licenses for critical and deep-seated minerals after states failed to attract small mining companies to explore mineral resources in the country.

Exploration license (EL) is being offered for the first time in order to attract expert organizations that will explore the country’s minerals.

The Mines and Mineral (Development and Regulation) Amendment Bill, 2023 empowers the Center to notify and auction ELs for 29 critical and deep-seated minerals. However, the state’s performance was poor, unplanned and slow.

Of the 14 state governments that have received blocks of exploration licenses so far, only six have initiated the tender process for the 12 blocks. Fragmented and uncoordinated auctions of EL by different states resulted in a lack of response from private search agencies.

An order issued by the mines ministry said, “…The Central Government will henceforth inform the mining blocks and conduct the auction for granting exploration licences.”

“On successful completion of the auction, the Central Government will notify the state government about the details of the preferred bidder in the auction and the state government will issue exploration license for this area to such preferred bidder in accordance with the rule.” he added.

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Critical mineral exploration

Last year, the Center amended the MMDR Act to make provision for EL and composite licenses under which joint concession can be granted for exploration and mining of mineral resources. Auction rights were given to states for 29 minerals, including apatite, beryllium-containing minerals, cadmium-containing minerals, copper-containing minerals, diamond, gold, graphite, lithium-containing minerals, nickel-containing minerals, titanium, tellurium, tungsten, and zirconium. Another list, including 24 critical and strategic mines, was put up for auction by the Center for the purpose of granting composite licenses and mining leases.

EL’s aim was to facilitate, encourage and promote private sector participation in all areas of mineral exploration for critical and deep-seated minerals. The private agency’s participation in exploration was expected to bring advanced technology, finance and expertise.

The change was expected to create an enabling mechanism and bring expertise from around the world in the value chain of geological data collection, processing and interpretation, and strengthen risk-taking capability for exploration of mineral deposits through the adoption of expertise and technologies. It was also expected to provide a conducive legal environment to attract foreign investments and youth. mining companies in the country.

However, as each state began auctioning blocks in a fragmented manner, exploration agencies decided to refrain from participating in India’s mineral exploration efforts.

Exploration license blocks are large in size and specialized exploration agencies are needed for operations. When blocks of exploration licenses are auctioned separately by different states, these specialized organizations, including international organizations, need to approach and contact different state governments to participate in the auctions.

“The fragmented and uncoordinated auction of exploration license blocks by different state governments may have led to non-response to the auction of exploration license blocks by the state governments,” the mines ministry order said.

“As exploration license blocks are being auctioned for the first time in the country, concerted efforts are required to create the necessary awareness for successful auction of the blocks and ease of participation in the auction by potential bidders.”

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Rajnish Gupta, partner in EY India’s tax and economic policy group, said two important factors could increase interest in the research.

“First, providing as much geological information as possible allows geologists to begin their preliminary work, which is often a time-consuming process. Second, first-come, first-come, with clearly defined criteria for granting exploration licenses, common in established mining countries such as Canada, Chile, Australia and Brazil.” Adoption of first serve system can also increase interest,” said Gupta.

This approach gives explorers a healthy time incentive to conduct evaluations quickly. He added that bidding processes are most effective where the existence of a mineral deposit is well established or there is already a high level of exploration interest.

Resource identification of critical and deep-seated mines and their share in total mine production are currently insufficient. India is mostly dependent on imports of these minerals.

Gold, silver, copper, zinc, lead, nickel, cobalt, platinum group minerals, diamond, etc. Minerals located deep inside are high value minerals. Exploring and mining these minerals is difficult and expensive compared to surficial and bulk minerals. These minerals are critical for new-age electronics, the transition to clean energy (solar, wind, electric vehicles), and traditional sectors such as infrastructure and defense.

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