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Late tweaks likely to delay India’s New Mineral Policy

Late tweaks likely to delay India’s New Mineral Policy

Photo by Reuters

29th April 2016

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) – Last-minute tweaking of the National Mineral Policy (NMP) is likely to delay its implementation, as changes opposed by a section of the mining industry need to be reconciled, according to the architect of the NMP, who is an official in the Mines Ministry.

The dilution of incentives for exploration, proposed at the last minute, had caused concern among mining entities, and the government still needed to make a call on whether to apply the amendments, said the official.

The NMP, which was originally slated for the public domain in May 2016, would now miss the deadline, and Ministry officials had not revealed a fresh timeline for announcing the new policy.

The NMP had initially been scheduled for announcement in January 2016.

Contrary to the initial draft policy, the new changes stipulated that mineral explorers would not automatically gain any preferential rights to develop a block if they were able to establish viable mineral resources in the block.

Further, the explorer would not be entitled to any fiscal incentive or revenue sharing for the block, nor would the subsequent development of commercial production by another investor be permitted.

In the earlier draft of the NMP, it had been proposed that, in the case that a minerals explorer established viable mineral reserves, it would enjoy the first right to form a joint venture with an Indian mining or mineral processing company to develop the block.

Ministry officials said that the changes in the NMP had already been incorporated, since, in hindsight, it was felt that offering any first right awarded to an exploring agency to develop the block could violate the new mining legislation.

This was because the legislation allocated mineral blocks through mandatory auctions and any first-right benefit could cause legal challenges.

However, a section of the mining industry has opposed the changes on the grounds that, while they would have to secure reconnaissance licences through competitive bidding, they would not get anything, even after successfully establishing a viable mineral resource. This was barring a fixed payment from the ultimate mine developer for a period of 50 years, which was not adequate compensation for high-risk ventures like mineral exploration.

It was pointed out that, in the case of an exploration company failing to establish any viable mineral resource, all it could expect was part compensation of costs from the Indian government's National Mineral Exploration Fund.

The Geological Survey of India had identified 100 blocks covering an estimated 12 000 km2, which would be up for offer for exploration through domestic and foreign mineral exploration agencies.

Edited by Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia

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