Mines Min­istry urges States to con­sider shar­ing roy­alty with ex­plo­ration com­pa­nies


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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 said. 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.


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 Fe­bru­aryend 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.

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