NEW DELHI | Feb 03, 2016: The government plans to transform the mining sector with a new policy by offering global and Indian firms about 100 large plots for exploration of various minerals with a reverse auction to explore, followed by another round of bidding to extract the ores, official sources said.

In the first stage, companies will bid for royalty they will get for minerals they discover and compensation for the expenditure on exploration if they do not find any commercial reserve in the block.

The mines ministry has initiated inter-ministerial consultations for the new minerals policy, which aims to significantly expand exploration of minerals and attract private capital for the sector that will also benefit the states.

ET had reported on January 4 that the government was identifying large tracts of land for auction to mineral exploration companies.

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

The policy provides for identification and auction of potential blocks to exploration agencies that are registered in India.

The government will conduct an online reverse auction among technically qualified agencies. The companies will have to quote share of royalty that accrue to state governments throughout the lease period of the mine once it begins operations. Companies seeking lower share in royalty will win the blocks for exploration.

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

The government will work out normative cost of exploration works for different minerals to compensate mineral explorers in case reserves are not found. The compensation will be made through a fund set up to enhance exploration activities.

The government has laid emphasis on private sector participation in exploration as India has been able to carry out only 10% regional mineral exploration while countries like Australia that have similar geological endowment have completed 100% of exploration.

(Source: http://economictimes.indiatimes.com/)