As part of its policy to secure critical and strategic minerals, Mines Ministry is planning to establish a fund to support exploration, acquisitions, and investment opportunities, while also setting up mineral processing facilities abroad.
The fund, the contours of which are being worked out and still under discussion, could be on the lines of the National Mineral Exploration Trust (NMET) with a probable two-tier structure. It would have a funding provision that includes contributions from the industry, and financial institutions, if needed.
According to officials, discussions are underway to see if it is feasible to include private equity and other financial institutions as investors in the fund, with sovereign wealth funds permitted to invest in it.
This fund is expected to be a part of the overall National Critical Minerals Mission.
As part of the proposed Mission, efforts could also be made to secure loans from multilateral financial institutions.
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“So, we are looking to have a fund which will aid investments towards mining, exploration and if necessary, set-up or carry out processing of critical and strategic minerals overseas. The contours of the fund are being worked out. We are in touch with PE players, financial institutions, and even Indian mining companies to invest in it, and then pick up stakes when projects materialise,” an official told businessline.
“Legalities are being explored,” the official added.
In fact, officials are proposing that “if provisions allow”, the fund “acts as guarantor” for the continuity of overseas mining projects by and for Indian companies. By doing so, it can take ahead stalled projects - if need be - while also instil confidence in private investors of their investments made overseas.
Another section of Ministry officials has proposed a part of the NMET funds be used to start this proposed corpus for funding overseas projects. However, that would require a change in the legalities (Act). The NMET has ₹6,000-odd crore corpus which is used to develop projects in and around mining areas of the country.
NMET-type structure
The NMET formed under the Mines and Mineral (Development and Regulation) Act, has a two-tier structure.
The apex body of the Trust is the Governing Body, chaired by the Union Mines Minister. The Executive Committee, chaired by the Secretary, administers and manages activities. The NMET Fund receives money from holders of a mining lease or a prospecting licence-cum-mining lease, an amount equivalent to two per cent of royalty paid in terms of the Second Schedule of the MMDR Act.
The NMET supports regional and detailed mineral exploration activities in the country. They include special studies and projects to identify, explore, extract, beneficiate and refine deep-seated and concealed mineral deposits, studies on mineral development, sustainable mining, mineral extraction, and metallurgy adopting advanced scientific and technological practices, and detailed and regional exploration for strategic and critical minerals.
“So if we set up a similar fund for overseas projects, it will give us a better visibility in starting projects while our bargaining power in G2G meetings increase,” a second official said.
In fact, the Mines Ministry had previously asked several PSUs - which have experience in overseas operations - to come together and bid for critical mineral projects overseas. Due diligence by “one such group” is being carried out in Australia for lithium blocks, sources said.
India already has 13 MoUs with South American nations like Argentina, Bolivia, Chile; African nations like Mozambique, Congo and others, and Australia for mineral exploration and partnerships; while a few more - including with Asian nations - are being explored for processing technology know-how transfer.
National Critical Mineral Mission
Under the proposed National Critical Minerals Mission, preparation for which is under way, the Centre will provide targeted subsidies for mining and for setting up evacuation infrastructure.
“An incentive scheme for setting up mineral recycling is being explored and will soon be introduced,” the official said. Ministry officials met industry participants and have been taking feedback before finalising Mission details.
The Mission components will also include a PLI scheme for mineral recycling, and push for having pilot projects that will look at recovery of critical minerals from over-burden. Timelines will be decided later.