India’s Mines Ministry has proposed a new set of rules for the auction of offshore mineral blocks. It is also in the process of identifying such mineral blocks, including those in exclusive economic zones beyond territorial waters.

The draft rules, put up for public comments recently, has proposed that composite licences and production leases shall be granted through “an ascending forward online electronic auction”.

Private sector firms taking up deep sea mining projects need to make an upfront payment for the production lease. This payment will be equal to the lower of 0.50 per cent of the estimated value of resources or ₹100 crore. The payment will be made in three instalments — two of 20 per cent each and a final one of 60 per cent — to the Centre.

For blocks whose estimated quantity of mineral resources is not possible to be assessed for calculating the value of estimated resources, the net worth requirement would be ₹25 crore.

The rules also seek payment of performance security that will be equal to, lower of 0.50 per cent of value of estimated resources or ₹100 crore in the case of production lease; and 0.25 per cent of value of estimated resources or ₹50 crore in the case of composite licence.

Net worth requirements for auction of production lease will depend on the value of estimated resources in the block. “However, net worth requirement will not exceed ₹200 crore,” the draft mentions.

The bids shall be for an amount equivalent to 0.25 per cent of the value of estimated resources or ₹10 crore, whichever is lower.

Typically, deep sea mining refers to extraction of minerals from the ocean floor, flound at depths of around 200 meters to 6,500 meters.

Incidentally, the Centre had recently amended The Offshore Areas Minerals (Development and Regulation) Act, whereby it introduced a non-discretionary auction process. The Act provides for development and regulation of mineral resources in the territorial waters, continental shelf, exclusive economic zone and other maritime zones of India.

The draft proposes at least G2 level of exploration (General Exploration) for considering a block for auction for production lease.

However, in case of blocks of Construction Grade Silica Sand and Lime Mud or Calcareous Mud, auction for product in lease can be made at G3 level of exploration also.

For grant of composite licence, the block should be explored up to G4 level of exploration or mineral potentiality of the mineral block should be identified.

Blocks identified

According to Ministry officials, some blocks in exclusive economic zone of India beyond territorial waters (12 nautical miles) have been identified. The minerals in question include lime-mud & poly-metallic nodules.

“In this regard, Ministry has sought comments/inputs from concerned Ministries/Department for availability of the offshore blocks for grant of operating rights to avoid any overlapping with the projects,” said the Centre.

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