Economy

Mines Ministry urges States to consider sharing royalty with exploration companies

Debabrata Das New Delhi | Updated on January 19, 2018

Miners rest inside an underground Barora coal mine at Dhanbad district in Jharkhand, India, in this September 17, 2012 file photo. India is getting ready to open up commercial coal mining to private companies for the first time in four decades, with the aim of shifting the world's third-biggest coal importer towards energy self-sufficiency. To match INDIA-COAL/ REUTERS/Ahmad Masood/Files   -  REUTERS

States hold key to mineral exploration policy

The Ministry of Mines has asked the State governments to consider sharing the mining royalty with companies undertaking exploration activities.

“The States have to agree to the proposal before we can go forward as they have to forego a part of the royalty. We have asked the States to give their recommendations to the proposal. I believe the States will agree as better data about the existence of minerals will lead to higher bids and more production in the State,” a senior official of the Mines Ministry told BusinessLine. The proposals are part of the National Mineral Exploration Policy which aims to boost exploration activities. The mining industry has raised concerns about the quantity and quality of available geological data for conducting mineral block auctions and the new policy seeks to address them.

The Ministry considered three options – sharing of royalty over 50 years, reimbursement of exploration cost with a 25-30 per cent return, and joint venture with a PSU for developing the block after exploration, with the explorer having first right of refusal to be partner.

“Sharing of royalty seems to be the most viable option out of the three. I do not see why States will not agree to it. It is only the royalty from the blocks where fresh exploration activity is carried out that will be shared,” the official added.

Tenders annulled

Meanwhile, mineral block auctions for limestone in various States have not seen enough bids leading to the annulment of tenders. However, the Mines Ministry is confident that iron ore mining leases will be among the first that will be given to new developers under the auction route.

“Gujarat and Rajasthan have had to annul the auctions for the limestone mines due to lack of bids. But the process was going according to the prescribed timelines and neither the States nor the Centre was at fault for the delays. Unfortunately the problems in the cement sector did not make the mines attractive for auctioning,” the official said.

The official added that a similar issue was faced by Chhattisgarh for the limestone mines that were on offer and the State has extended bid submission dates to attract more participants.

“Karnataka will soon re-issue tenders for the iron ore mines under a new model tender document and I believe this is where you will see a lot of demand. I expect the auctions will begin by February-end or beginning of March for these mines,” the official said.

So far, a total of 43 mines containing various minerals have been put on offer by nine States. Pre-bid conferences have taken place and technical bids have been opened for most of the mines on offer.

Published on February 03, 2016

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