Mining is one of the very essential industries of India, serving to bring in a lot of revenue for the government as well as providing employment to loads of Indians. Being an extremely resource-rich country, India has great potential in this direction.
However, the lack of a comprehensive mineral exploration policy has prevented India from achieving much success. Large tracts of mineral-rich tracts of land lie unexplored and remain unknown, all of which could have been better utilised to provide jobs to people.
It is for this reason that the Government of India adopted a new National Mineral Exploration Policy (Non-Fuel and Non-Coal minerals) in July 2016. The new policy addresses the need for a more meticulous exploration of India’s mineral belts by suggesting measures and strategies that can be undertaken to rectify the present deficit.
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Need for a Mineral Exploration Policy
Despite its huge potential, the mining industry has seen a steady fall in its share in India’s Gross Domestic Product (GDP), declining from 1.2% to 1% as per a December 2014 McKinsey & Company report. Furthermore, India’s expense on mineral exploration is negligible at 0.4% of the total global exploration expenditure, compared to Canada’s 14% and Australia’s 12%. India’s average spend per square kilometre is also woefully behind at $17/km2 compared to $67/km2 and $51/km2 in China and Brazil respectively.
India’s convoluted policies also played a hugely detrimental role. Unnecessarily elaborate bureaucratic procedures seem to have acted as a deterrent to companies. The four hundred reconnaissance licenses that were given out between 2001 and 2015 have resulted in only fifteen mining leases.
Transparency is an urgent need of the day and the new mineral exploration policy endeavours to facilitate prospective clients into successfully passing the stringent bureaucratic hurdles.
History and Background
The mining industry in India is mainly regulated according to the Mines and Minerals (Development and Regulation) [MMDR] Act of 1957, which was put into effect under the National Industrial Policy of 1957. Several amendments have been introduced to this to increase the ease of doing business, to attract more clients (such as Foreign Direct Investment) and therefore increase revenue.
The State governments are the so-called owners of mineral resources in India, and most, if not all, of the revenue goes to them. They are also authorised to give concessions and make laws restricting illicit mining activities. However, a recent Supreme Court order has overturned this somewhat by pronouncing the owner of the land as the ultimate owner.
In 1993, post India’s liberalisation, a National Mineral Policy was designed which would cater to the needs and demands of the private sector. A revised National Mineral Policy was approved in 2008 by the central government to reflect the contemporary mining scenario in India.
Features of National Mineral Exploration Policy
The National Mineral Exploration Policy of 2016 serves to plug the gaps in the existing framework to provide opportunities for land survey and hopes to increase the conversion rate of reconnaissance permits to leases. The features of the policy are as follows:
- The government aims to utilise the very best of modern technology and strategies. Besides experienced and trained personnel, the government will also formulate a commensurate budget to achieve its aim.
- The promise of India’s mining sector is to be recognised and its potential maximised to the fullest degree. The share of the mining industry in the economy is expected to increase.
- Baseline Geoscientific data in accordance with world-class standards will be released in the public sphere and this data will be regularly brought up to date. The government will determine which kind of data should be on the market for prospection and the timelines of their issuance.
- The Geoscience data will be freely distributable and made a public good. The government will take the responsibility of financially backing such research and for the dissemination of it.
- Research activities will be undertaken in conjunction with the private sphere.
- The government will enter into partnerships with research bodies, academic institutions and industry panels to collaboratively produce new technology.
- Special attempts will be made to uncover deep-seated and obscure deposits. This would include the recognition and characterisation of the regolith, finding out the depth and detection of the distal footprints of the mineral systems.
- A National Centre for Mineral Targeting (NCMT) will be constituted, which will be an autonomous research enterprise focused on increasing the discovery rate of minerals during the exploration process. It will be a collaborative effort between the public and the private sector.
- A dedicated Geoscience database, the National Geoscience Data Repository (NGDR) will be constructed by the Geological Survey of India (GSI, which will also be published on a digital medium.
- A National Aerogeophysical Mapping Program (NAGMP) will be initiated. Low-altitude data will be used for a cartographic study of mineral deposits. It will be first done over 0.8 million square kilometre of area deemed to contain Obvious Geological Potential (OGP) and then over the rest of the country.
- Emphasis will be placed on the use of space technology to determine mineral-laden land and to counter illegal mining.
- Particular regions and minerals will be provided special priority in budgetary allocations. The choice of minerals will be decided on the basis of market demand, relative need and importance in the industry and requirement for national security. These will be reviewed regularly and might be modified by the Central Geological Programming Board (CGPB) every year and after five years too.
- Incentives will be given to private sector prospectors as much as is permissible within the current legal structure. The government wants to tap into their technological and financial resources. Bureaucratic procedures will be streamlined for their ease.
- Exploration permits for certain predetermined mineral-rich tracts will be auctioned off by the Union Ministry of Mines. State governments have been delegated with task of supplementing the Geological Survey of India’s reports with their own research and then selecting the mineral blocks which are to be auctioned off.
- The auctioning will be undertaken on a revenue-sharing premise which will ensure that if the auctioned block brings forth auctionable resources, the revenue will also go to the client. Therefore, private agencies will be permitted the right to a certain percentage of revenue in the form of either a share of the royalty or the premium over the fifty year concession period, or can be availed of in the manner of a lump sum amount.
- Risk-return structures will be built to ensure exploration agencies are compensated in case their work does not come to fruition and no mine able resources are discovered.
- The Indian Bureau of Mines (IBM) has been mandated to undertake ore beneficiation. The government has asked the Bureau to develop environmentally sustainable tactics while also minimising waste. Indigenous techniques are to be preferred to cut down on imports.
- The administration will be restructured for better coordination among the various agencies responsible for managing the mining industry. Since mineral exploration requires both aerial and forest survey, obtaining the proper clearances had so far been a time-consuming process. The government will strive to do away with these hassles under its new policy.
Benefits of National Mineral Exploration Policy
The National Mineral Exploration Policy has been so designed to sever the monopoly of the Geological Survey of India and the Mineral Exploration Corporation Limited, both of which are public sector units. It will pave the way for investment and direct participation of private players, both domestic and foreign.
Of the 0.57 million square kilometre of land with Obvious Geological Potential (OGP), only ten per cent is being currently explored and mining is being done on only 1.5-2% of it. Industry sources estimate that if this policy is enforced, the mining industry will receive a major fillip, which may catapult India’s share in the global mineral production charts.
This policy has been well-received by the mining industry. Some of the reasons why are as follows:
- The preliminary research work will be done by the government and will be freely accessible, thereby cutting the cost of exploration.
- The National Geoscience Data Repository will be very useful for researchers and students, as well as potential prospectors.
- Adequate compensation has been promised to private agencies in the case of failed reconnaissance attempts. This financial cushion will make explorers more inclined to undertaking risks.
- The revenue-sharing alliance will also incentivize private participation.
- This boost to the mining industry will serve to bring in even more employment. Manpower in the form of qualified professionals will become an absolute necessity.
- The policy will serve to speed up the permit requisition process.
- A stable and beneficial mineral investigation policy will make India appear more attractive to foreign players. They will be encouraged to fully engage in the market.