KOLKATA (miningweekly.com) - Indian government-owned mineral and metal companies have been asked to get first mover advantage by taking part in prospecting and exploration projects after the sector was opened for more participants.

The call on the government-owned and managed companies also included those already operating in mineral or mineral processing sectors, such as the country’s largest steel producer, Steel Authority of India Limited (SAIL), iron-ore miner NMDC Limited and MOIL (formerly Manganese Ore India Limited), an official in the Mines Ministry said.

The government has rationalised that these government companies already had mining and metal industry experience, and that entering prospecting and exploration would be backward integration of their mining operations, the official said.

Incidentally, SAIL was the country’s second-largest mining company, after Coal India Limited (CIL), operating seven iron-ore mines with aggregate production of 25-million tonnes a year for captive consumption.

However, no indication was available on whether NTPC Limited, the country’s largest power producer, would be included in the list of government-owned companies to take up prospecting and exploration.

Last year, NTPC chairperson Arup Roychowdhury unveiled the company’s plans to evolve as a coal-producing major setting a target of 300-million tonnes a year within the next five years.

The power producer required 160-million tonnes a year of coal for its thermal power plants, 90% of which was sourced from CIL.

NTPC has ten coal blocks with it, under various stages of development with aggregate reserves of five-billion tonnes and production potential of 100-million tonnes a year.

The power producer had already announced the establishment of a separate dedicated division within the company to undertake mining projects to achieve its own coal production target.

Last month the government tweaked mining legislation through an ordinance amending the Mines and Minerals (Development and Regulation) Act, No 67 of 1957, which, amongst other changes, permitted private and government companies to enter into prospecting and exploration projects across the country.

Until now, only select government agencies like Geological Survey of India, Mineral Exploration Corporation of India, the Department of Atomic Energy and provincial levels of the Directorate of Mining were permitted prospecting and exploration projects.

The Mines Ordinance issued last month enabled private and government companies specifically notified by the government to enter prospecting and exploration of minerals but with a rider that these companies would not have any other rights on the mines.

However, to woo foreign companies into prospecting and exploration, the government would grant nonexclusive reconnaissance permits to companies undertaking such projects.

The unlocking of prospecting and exploration segments was prompted by dismal record in new discoveries of mineral resources in the country. According to a Mines Ministry report of 2014, GSI had identified 571 000 km2 of geological potential across the country but no project had been undertaken to explore this potential largely owing to shortage of technological and fund resources available with the government agencies.

Ministry officials said that the country’s lack of focus on prospecting and exploration was reflected in the fact that spends on such project did not exceed $50-million per year since the last 30 years.