NEW DELHI | Feb 24, 2016: The government will auction 19 gold mines, three diamond mines and eight iron ore mines along with 70 other mega blocks with a minimum area of 100 square kilometre each for exploration to Indian and global firms.

The Geological Survey of India (GSI) has handed over a list of 100 mega blocks in 22 states to the mines ministry for auction to exploration agencies, mines secretary Balvinder Singh told ET.

"We had asked GSI to identify blocks for exploration. The agency has identified 100 blocks of around 100 square kilometre or more for carrying out exploration on revenue sharing model. We expect to finalise a policy for mineral exploration soon, which will give details about the revenue sharing model," he said.

The government expects the exploration policy to transform the Indian mining industry as the country has been able to carry out only 10 per cent regional mineral exploration while countries like Australia that have similar geological endowment have completed 100 per cent of exploration.

Among the large mines identified for auction are 27 base metal mines, eight iron ore and eight limestone mines and nine tungsten mines. Five manganese, six nickel and five rare earth metal mines will also be put up for auction.

The mines ministry has begun informal consultations with other ministries on the proposed policy, after which the ministry will circulate a note and put up the policy for consideration of the Union Cabinet.

The new exploration policy provides for identification and auction of the 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 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 post 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 policy proposes to incentivise private explorers in case reserves are established and indemnify them when reserves are not found.

The policy aims to replace the earlier method of awarding reconnaissance permits by the government to private firms for preliminary prospecting of a mineral through regional, aerial, geophysical or geo-chemical surveys and geological mapping.

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