India’s Mines Minister moots profit contribution by miners for exploration
KOLKATA (miningweekly.com) – India’s Mines and Steel Ministry has urged mining companies to allocate 10% of their profits to exploration projects.
“The allocation of profits by the mining industry would enable India to harness the true potential of the country’s mineral resources,” Mines and Steel Minister Narendra Singh Tomar said, adding that, in response, the government would earmark areas for regional exploration.
He said that the Geological Survey of India had identified 100 prospective mineral blocks of 100 km2 each and that these would be auctioned within the current year. The government expected that this route would open up greater inflow of foreign direct investment in the Indian mining sector.
SBI Caps, the financial services arm of India’s largest commercial bank, State Bank of India, would lay down the rules of the auction. Under recently changed legislation, the respective provincial governments would conduct the auction as per the framework that the Mines and Steel Ministry provided.
Last week, the government unveiled the National Mineral Exploration Policy (NMEP), which lay down the framework for the auction of mineral blocks for exploration by government-owned agencies, as well as private domestic and foreign exploration companies.
However, the government did not provide details about the suggested profit contribution towards exploration, or how the suggested contribution would work in tandem with the newly created National Mineral Exploration Trust (NMET).
Last year, the government created the NMET as a specific fund aimed at stepping up mineral exploration across the country with every mining lease holder contributing an equivalent of 2% of royalty paid towards funding the NMET.
It might be noted that, when the NMET was created, several private and government miners had frowned on the NMET, saying that the additional levy would push up costs of mining, even as the Indian mining industry remained one of the highest taxed compared to global counterparts.
At the same time, existing mining lease holders were mandated to contribute an equivalent of 30% of the royalty payable toward District Mineral Fund (DMF), created last year toward funding local area development. Investors securing mining leases though the auction route were mandated to pay an equivalent of 10% of royalty payable towards DMF.
According to government data, while mining potential in the country was estimated to cover 800 000 km2, only about 10% had been explored, with the government hoping that the NMEP would facilitate entry of foreign specialised exploration companies to take up projects in the country.
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