KOLKATA | Jun 29, 2016: The new National Mineral Exploration Policy approved by the Union cabinet on Wednesday is expected to boost private investment in the country's mineral exploration sector.
It is aimed at attracting both domestic and foreign mining companies in exploration jobs. In doing so it is poised to break the monopoly of the state-owned behemoth Geological Survey of India and Mineral Exploration Corporation Ltd.
The policy will pave the way for competitive bidding of prospective mineral blocks through the process of e-auction. Significantly, through the policy state governments will have a key role in this since they will be responsible for identifying mineral blocks to be put up for auction.
It will also encourage participation by junior exploration companies that gather mineral data during exploration and submit it to the respective state governments, following which the mining lease pertaining to the mineral block is likely to be auctioned. "NMEP is a bold step. It will give impetus to private investment in mining, especially exploration, which is fraught with risks and is time consuming. We urgently need to build up a database using satellite imaging techniques and put it up in public domain," Ravi Uppal, group CEO, JSPL said.
Kameswara Rao, a partner at PwC who specialises in energy, utilities and mining said, "This policy will set off a healthy investment cycle. It will help attract private investment that can use potentially available geoscience data for greater exploration activity and entail further investment through subsequent mining activity."
Commenting on NMEP, Abhijit Pati, CEO Vedanta Aluminium said: "It will attract private investment and FDI in mining sector and bring in best in class practices in exploration activity. With more investment in the mining, more jobs are likely to be generated in the sector."
The new policy has incentives for the explorer since the owner of the mining lease is required to pay royalty to the state government and an equal percentage to the private exploration company. The revenue sharing could be in the form of a lump sum or an annuity to be paid throughout the period of mining lease, with transferable rights.
If implemented properly, the policy could help plug a huge gap in exploration data, mining experts said. Of India's entire Obvious Geological Potential area, identified by the Geological Survey of India, only 10% has been explored and barely 1.5-2% is being mined.
"NMEP will open new avenues in mining to private exploration companies. It is a step in the right direction," said HC Daga, former president of Federation of Indian Mineral Industries. "It will facilitate dissemination of information in mineral data. Unless information is available mining companies cannot take a call on investment," he said.
Anjani Kumar Agarwal, national leader-metals and mining at EY said the mining sector needs to build a robust pipeline of mines that can be auctioned. "Hopefully, with this policy enablement, global specialist explorers with modern technology and expertise will be attracted to India. They will be willing to embrace exploration risks and be more engaged with the evolving mining scene in the country if they see a stable, meaningful and potentially rewarding policy environment," he said.
The policy is also likely to reduce cost of exploration, according to PwC's Rao since, "it will provide useful interpretation of the geoscience data and could spur more investment in lower altitude and higher resolution surveys".
He said it comes at the right time in the commodity cycle and mining companies will focus on development efforts now and build resource base that can deliver when demand and commodity prices recover.
To encourage mineral exploration in the country, the mines ministry has already notified the National Mineral Exploration Trust.
(Source: http://economictimes.indiatimes.com/)