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The government must offer the first right of refusal to private explorers, among other incentives, to encourage mineral production in the country, CEO of Vedanta Sesa Goa and Port Business, Rajagopal Kishore Kumar, said.
Speaking to BusinessLine , Kumar said, “The country has a land mass of 3.3 million sq km and in that we have an exploration potential of 0.57 million sq km. Of this, we are exploring only 2 per cent today.”
The government has formed the National Mineral Exploration Trust and over the years “we have been contributing taxes so that the country’s exploration capacity goes up”. “The reality is that we are spending less than $100 million on exploration in the country today,” he added.
According to Kumar, the State government-controlled mineral bodies must form joint ventures with private players so that the exploration and mining of reserve blocks can be done.
He said, “In the country today, public sector undertakings are sitting on large blocks which are reserved for various purposes by the State governments. So if the States want to progress on minerals side, they should bring in private explorers to develop the prospectivity jointly with the government. And then the government can auction it, lease it or develop it by itself so that the process of mineral development is enhanced.”
But merely allowing companies to come and explore will not be enough to encourage them to engage capital and manpower. Kumar said, “You have to provide the private explorer the first right of refusal to mine. The private explorer who comes into the country will have no incentive to just go for exploration. Once the project is developed into the next phase of mining, the explorer will have the option to mine the project or to sell the asset with the project to somebody else. The third option is that the explorer gets paid a handsome reward for finding the reserve and resource.”
“We have made representations to the government on the key enablers to enhance the speed of exploration in the country. The representations are regarding how the exploration licence should be granted and what kind of seamless rights should be given so that the mining company that does the exploration has the first right of refusal for mining and to convert the prospect into a reserve and a reserve into a resource,” he added.
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