Low ratio of blocks allotted to private explorers vis a vis state entities
The Centre has decided to reserve for private explorers just 20 blocks out of a total 100 blocks to be allotted under the new mineral exploration policy.
The remaining 80 blocks are to be allotted to government and public sector entities, with a time-bound target to complete the exploration within one year.
Thirty blocks are to be allotted to the Mineral Exploration Corporation Ltd. (MECL) and the Geological Survey of India (GSI) each, while central public sector firms will be assigned 20 blocks for exploration purposes. MECL and GSI are under the administrative control of the mines ministry.
Reason stated for the bias allocation
The ministry has cited a paucity of exploration firms in India for the low number of blocks kept aside for the private sector at this juncture.
Despite large reserves of minerals including copper, bauxite and iron-ore, India’s progress on their exploration has been quite poor with just 10 per cent of a potential 8 lakh square kilometres being explored till date.
Basis of exploration policy
Under the policy, permits for exploration of non-hydrocarbon minerals are to be auctioned to private sector players on a revenue-sharing basis.
The exploration rights would be awarded to the bidder seeking the minimum revenue-share if their exploration results in the discovery of `auctionable’ reserves.
Even though private players, including foreign investors, were already allowed to explore blocks for determining mineral reserves, the new Mines and Mineral (Development and Regulation) Act of 2015 necessitated a change in the system.
Previous basis before the enforcement of Mines and Mineral (Development and Regulation) Act 2015
Previously, a reconnaissance or exploration permit could be converted into a prospecting licence and mining lease if mineral reserves of viable scale were discovered.
New Mechanism as per the law
Since the new mining law requires all blocks with identified mineral reserves to be auctioned instead of being allotted by an administrative mechanism, such conversion of a reconnaissance permit isn’t possible.