KOLKATA (miningweekly.com) – Close on the heels of India’s Mines Ministry propagating private-public-partnership (PPP) model contracts to boost private capital into mineral exploration, the government is now looking to invite international mining juniors to fill the void in private investment.
The Mines Ministry is preparing to invite about 30 to 40 mining juniors to submit proposals, after which a shortlist will be drawn up. Provincial governments will then select international companies to float PPP special purpose vehicles for exploration projects, senior government officials have said.
It has been pointed out that the Mines Ministry will act as the facilitator in identifying international mining juniors offering the best exploration solutions and investment proposals, as not all provincial governments are equipped to make necessary assessments in international markets.
The move to woo mining juniors comes in the wake of Mines Minister Piyush Goyal advocating the PPP model to attract higher private investments into mineral exploration. “The PPP model could be tried to give fillip to Indian mineral exploration which is currently constrained by lack of private sector participation in the activity,” Goyal said last week. “The time is ripe to reflect on where we have gone wrong,” he said.
Though not officially acknowledged, sources say that despite the liberalisation of investment norms through the Mines, Minerals Development (Regulation Act) 2015 and permission for 100% foreign direct investment in the mining and minerals sectors, international majors have failed to make any significant commitments in India.
Despite several rounds of presentations, pitches and meetings held by the Mines Ministry, international majors like BHP Billiton, Vale, Rio Tinto and Glencore are yet to open shop in this country.
The sources said that several organisations, including the Federation of Indian Mineral Industries, have brought to the attention of the government that policy weaknesses are hindering foreign direct investments in domestic mining and exploration projects. Citing an example, the sources said that as per existing policy, any holder of nonexclusive reconnaissance permits cannot automatically have a claim for a composite mining licence. The sources said that without any preferential claim accruing to a holder of a nonexclusive reconnaissance permit to a composite licence in the case of establishing a viable deposit, no international major will be willing to commit foreign direct investments in the country.
The mining industry points out that no country resorts to the auction of a mineral asset once an exploration project has established a viable deposit and that ‘first come, first served’ is the global practice.
It is clear from the lack of interest from international majors that securing mining licences through competitive bidding at auction does not find acceptance among private investors, the sources add.