New Delhi: A new legislation passed by Parliament today empowers Central Government to exclusively auction mineral concessions for certain critical minerals, and also omits six minerals from the list of 12 atomic minerals. The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, was passed by Rajya Sabha today after Lok Sabha passed it on July 28, 2023, and will now be sent to the President of India for assent. It also introduces exploration licences for deep-seated and critical minerals.
The Bill provides to remove from the list of atomic minerals, minerals of lithium, beryllium, titanium, niobium, tantalum and zirconium as they are technology and energy critical having use in the space industry, electronics, technology and communications, energy sector, electric batteries and are critical in net-zero emission commitment of India.
Mining and exploration of atomic minerals specified in Part B of the First Schedule of the Act is only being done through Public Sector Undertakings. Hence, exploration and mining of these minerals is very limited. Many of the minerals listed as atomic minerals have numerous non-atomic applications. In most cases, the non-atomic uses of these minerals far outweigh their atomic use. Many such minerals are not fissile or radioactive in nature. Some of these mineral commodities are also found associated with many other minerals.
“There is a need to vigorously increase exploration and production of the minerals proposed to be removed from the list of atomic minerals to meet the growing demands of the country wherein involvement of the private sector can be a force multiplier. Expansion in exploration and mining activities of these minerals will consequently increase their availability to the atomic sector also,” the Union Ministry of Mines stated. It claimed that demand for minerals like lithium used in lithium-ion batteries is likely to increase manifold as the focus shifts towards clean energy.
Currently, the country is dependent on imports for most of these important minerals as there is not much exploration or mining of these minerals due to existing legal provisions. These minerals have high economic importance and considerable supply risk due to geo-political uncertainties. “Upon removal of these minerals from the list of atomic minerals, exploration and mining of these minerals will be open to the private sector. As a result, the exploration and mining of these minerals is expected to increase significantly in the country,” the Ministry stated.
Central Government can now also exclusively auction mining leases and composite licences for certain critical minerals such as molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, platinum group of elements, minerals of “rare earth” group (not containing Uranium and Thorium); fertilizer minerals such as potash, glauconite and phosphate (without uranium) and minerals being removed from the list of atomic minerals.
The Ministry pointed out that “only” 19 blocks of minerals have been auctioned so far by the State Government such as graphite, nickel and phosphate out of 107 blocks handed over to the various State Governments. As these critical minerals are vital for the growth of the economy, the Ministry said that authorizing the Central Government to auction concessions for these critical minerals would increase the pace of auction and early production of the minerals which have become indispensable for new technologies such as space, electronics, information technology, energy transition, and food security.
Even though the auction would be conducted by the Central Government, the mining lease or composite licence for these minerals to the successful bidders will be granted by the State Government only and the auction premium and other statutory payments shall continue to be received by the State Government.
Introducing exploration licence for deep-seated and critical minerals
The Bill introduces provisions for the grant of a new mineral concession, namely, Exploration Licence (EL), in the Act. The exploration licence granted through auction shall permit the licensee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals mentioned in the newly proposed Seventh Schedule to the Act. These minerals are copper, gold, silver, diamond, lithium, cobalt, molybdenum, lead, zinc, cadmium, elements of the rare earth group, graphite, vanadium, nickel, tin, tellurium, selenium, indium, rock phosphate, apatite, potash, rhenium, tungsten, platinum group of elements and other minerals proposed to be removed from the list of atomic minerals. The preferred bidder for the exploration licence shall be selected through reverse bidding for a share in the auction premium payable by the mining lease (ML) holder. The bidder quoting the lowest percentage bid shall be the preferred bidder for an exploration licence. This amendment is expected to provide a conducive legal environment for attracting FDI and junior mining companies in the country, the Ministry said.
The blocks explored by the Exploration Licence holder can be directly auctioned for mining lease, which the government hopes, will fetch better revenue to the State Governments. The exploration agency would also benefit by getting a share in the auction premium payable by the leaseholder.
Deep-seated minerals such as gold, silver, copper, zinc, lead, nickel, cobalt, platinum group of minerals, and diamonds, are high-value minerals. It is difficult and expensive to explore and mine these minerals as compared to surficial/ bulk minerals. These minerals are extremely critical for new-age electronics, the transition to clean energy (solar, wind, electric vehicles) as well as in traditional sectors like infrastructure, and defence.
Resource identification for these minerals in the country is very limited as compared to surficial/ bulk minerals. The share of deep-seated minerals in total mineral production is meagre and the country is mostly dependent on imports of these minerals. Therefore, the Ministry said there was a need to further augment expediting exploration and mining of deep-seated minerals. The proposed exploration licence would facilitate, encourage and incentivize private sector participation in all spheres of mineral exploration for critical and deep-seated minerals, it said.
It further noted that the involvement of private agencies in exploration would bring advanced technology, finance and expertise in exploration for deep-seated and critical minerals. The proposed exploration licence regime is foreseen to create an enabling mechanism where the exploration agencies will bring in expertise from across the world in geological data acquisition, processing and interpretation value chain and leverage the risk-taking ability for the discovery of mineral deposits through the adoption of expertise and technologies.
As of today, even though 100% foreign direct investment (FDI) is allowed in the mining and exploration sector through an automatic route, currently there is no significant FDI received in these sectors. World over junior mining companies having expertise are engaged in the exploration of minerals, especially deep-seated and critical minerals such as gold, platinum group of minerals, and rare earth elements. “Hence there is an urgent need to attract FDI in these sectors,” the Ministry said.
– global bihari bureau