KOLKATA (miningweekly.com) – India’s Mines Ministry has identified 50 mineral blocks to be offered to private exploration companies under the new National Mineral Exploration Policy (NMEP).

The NMEP, unveiled last year, paves the way for the entry of private companies into minerals exploration in India. The Ministry expects around 30 specialised domestic and international exploration companies to apply for the allocation of blocks, a government official said.

The process of allocating the blocks is set to start in 2018. A list of registered exploration companies will be entitled to bid for the mineral blocks through an e-auction.

Under the policy, the exploration companies are mandated to complete exploration and submit data to the government, following which the provincial government will auction the same block for development and production.

The recipient of the final mining lease will be liable to pay a royalty to the provincial government and a certain percentage of this royalty will be paid to the private exploration company.

However, last week, the Mines Ministry through an official announcement, tweaked the NMEP, making provisions for upfront cash payment to exploration companies and incentivising smaller exploration companies to take up high-risk projects.

The Ministry contends that, in the absence of any cash incentive, exploration projects will be limited only to large mining conglomerates with deep pockets to engage in high-risk mineral exploration and exclude smaller specialised agencies.

The Ministry has proposed that an upfront cash payment be extended to the exploration companies of 0.5% of the value of the recoverable resource established by the exploration company or ten times the monthly retention fees payable to the explorer.

This payment would be made directly by the federal government and the payouts would come from revenues earned by the government from the auction of the mineral block for development.

The cash incentive would "broaden the profile of private exploration companies, domestic and international, and a larger number of participants . . . would [contribute to] the objective of increasing [the] contribution of the mining sector to gross domestic product from 2% to 4%, as targeted by the government," the official said.

The offer of 50 mineral blocks for exploration by private companies, which has until now been the exclusive domain of the government,  is an adjunct to one of the biggest auctions of explored mineral blocks, which the government has lined up.

As previously reported by Mining Weekly Online, the Indian government announced the auction of coal and non-coal blocks in the coming fiscal year. The Empowered Committee of the Ministry has identified the auction of 70 non-coal blocks like iron-ore, limestone and bauxite in the first tranche, next year.

It is understood that the total number of non-coal blocks that could be identified for auction could reach 280.