India’s mining policy shift

Recently mines and minerals (development and regulation) Amendment bill was passed by the parliament.

It aims to increase the private sector participation in the exploitation of critical minerals.

According to the world Bank study the demand for critical metals is expected to rise by nearly 500% by 2050.

How much of India’s critical minerals are imported?

Ministry of mines released a list of 30 minerals that are essential to economy and security of the country.

India is highly dependent on the imports of most of these critical minerals. This includes a 100% dependence on China, Russia, The USA, Australia and Soth Africa for critical minerals such as Beryllium, Lithium, Nickel, Cobal, Niobium and Tantalum.

India imported nearly $22.15 million worth of Lithium in 2021-2022. India is also heavily dependent on imports for deep seated minerals such as gold, silver, copper, Zinc, lead, nickel, cobalt, platinum group elements and diamond.

These minerals are comparatively more difficult and expensive to explore and mine in comparison to surficial or bulk minerals.

China produces 65% of world’s rare earth minerals, while India has 6% of world’s rare earth minerals but only produce 1% of global output.

According to the Atomic mineral directorate for exploration and research India’s tectonic and geographical setting have a geological history similar to the mining rich regions of Western Australia and Eastern Africa. This means that India could be having potential mineral resources.

Why participation of private sector is needed for exploration of critical and deep-seated minerals?

 Mineral exploration is highly specialised, time intensive and monetarily risky process that consist of techniques such as ariel survey, geological mapping and geological analysis.

According to UN framework for classification of resources mineral exploration is classified in four stages:

  1. G4 (Reconnaissance) – primary survey
  2. G3 (prospecting) – exploring locating mineral deposits
  3. G2 (general exploration)
  4. G1 (detailed exploration) – estimating of the minerals.

The MMDR amendment bill 2023 aims to develop the mineral exploration process in India at par with that of developed countries through private sector participation.

How does the mines and mineral bill 2023 aims to encourage private players?

  1. commercial mining – it omits six atomic minerals from list of 12 that cannot be commercially mined. Lithium, Beryllium, Niobium, Titanium, Tantalum were previously reserved for government entities.
  2. Removal of prohibitions: it permits previously prohibited activities such as pitting, trenching, drilling and sub surface excavation.
  3. Maximum area: activities in an area up to 41000 sq. km. will be permitted under the single exploration licence.
  4. Licensing: it proposes a new type of licence to be granted by the state government via competitive bidding to encourage exploration by private sector.

Some of the possible issues with bill’s proposal:

  1. Delay: private companies with exploration licences primarily generate revenue from the premium paid by the miner which would come only after successfully discovered mine is auctioned and operationalised.

However, this process could take years due to bureaucratic red tape for instance the Ghorabhurani- Sagasahi iron ore mine, a greenfield captive mine was auctioned in 2016 but production started only in late 2021 due to clearance delay.

  1. Uncertainty: while it is feasible to auction something that has a known value e.g., spectrum but it is difficult to auction something for which exploration has not begun.



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