Date | Aug 04, 2016:

The government is evaluating whether to adopt the live-auction format or tendering process for allocation of offshore mineral blocks.

This comes in the backdrop of the Indian Bureau of Mines (IBM) cancelling exploration licences of 62 offshore blocks awarded to 16 companies as they are located within the Coastal Regulation Zone (CRZ).

The offshore minerals are governed by the Offshore Areas Mineral (Development and Regulation) Act, 2002, which in its present form does not call for live auctions of mineral reserves, and licenses are given on the basis of bids received for tenders.

“As far as bidding mechanism is concerned for giving away offshore mining leases, the ministry of mines in its draft rules has called for allotment of leases via bids on the basis of reserve price fixed by the Indian Bureau of Mines,” a senior government official requesting anonymity said.

There is another view that these blocks be auctioned in the format adopted in case of other minerals such as coal, iron ore and bauxite under the Mines and Minerals (Development and Regulation) Amendment Act.

The Bharatiya Janata Party-led government is credited with setting up a template for natural resource allocation in India through coal block auctions.

“This would require amending the Offshore Areas Mineral (Development and Regulation) Act, 2002,” said another government official who also didn’t want to be identified.

InfraCircle on 19 July reported that the ministry of mines will frame the rules in the next three months for exploration and mining across the exclusive economic zone (EEZ) to harness rare earth minerals in the country’s largely unexplored offshore areas.

Rare earth elements are used in modern technological devices such as smartphones, solar panels, wind mills and hybrid car components, with China having a monopoly in rare earth element production.

“The matter will also be discussed with various state governments shortly,” said a third government official requesting anonymity.

Queries emailed to the spokespersons of the mines ministry and IBM on 2 August remained unanswered.

Experts believe that India’s offshore areas have a huge potential which comprises of beach sands consisting of rare earths and manganese nodules. However, they doubt the efficacy of live-auction format for offshore blocks.

“Live-auction process is very dangerous. It leads to irrational behaviour as well as serious problems for the environment,” said S. Vijay Kumar, former mines secretary.

The offshore mineral blocks have been identified by the Geological Survey of India that carries out regular surveys in the EEZ and territorial waters to assess resource potential.

India’s territorial waters extend up to 12 nautical miles from the coast. India’s EEZ extends to around 2.37 million sq. km wherein it enjoys exclusive legal right to utilize all resources.

(Source: http://www.vccircle.com/)