KOLKATA (miningweekly.com) – With global resource majors showing tepid interest in Indian mineral exploration projects, the Mines Ministry is working on models including offers of financial incentives for foreign junior exploration companies to undertake such projects.

Government officials familiar with the framing of such models said that foreign junior exploration companies would be offered funding, including risk funds from the National Mineral Exploration Trust (NMET), if they floated joint ventures (JV) with Indian companies for specific mineral exploration projects in specific geographies.

The government reckons that, unlike global resource majors, which are more interested in following up exploration projects with own development and mining investments, junior explorers will be more amenable to undertake standalone exploration projects in collaboration with existing Indian mining companies.

In terms of tentative plans, overseas junior exploration companies will be required to float JVs with either Indian start-ups or existing mining companies. The foreign investor will have the option of majority control.

These JVs will then have the option to submit specific mineral exploration projects to the Mines Ministry seeking risk funding from NMET, government officials familiar with framing of the model say.

However, a section of the Ministry officials is wary over a few “fly in the ointment” provisions that are being considered for incorporation in such funding options.

For example, a JV of a foreign junior exploration company will need to have exploration projects prepared by Indian government agencies to be eligible for funding through NMET.

It is believed by these officials that foreign exploration companies will bring in modern exploration technologies, and possibly even proprietary technology, for planned projects and that it was unlikely that these projects would be prepared by Indian government agencies, which might be unfamiliar with such technologies.

Yet again, another expected provision envisages that Indian mining companies will be eligible for exploration though JVs with overseas partners only within leasehold areas of their existing mines.

Officials counter-argue that this will severely limit exploration choices for foreign companies as it is possible that their investment priority will be exploration in greenfield geographies, as exploration of existing leasehold areas will limit fresh discovery possibilities.

The officials acknowledge that there are still several grey areas that need to be addressed, including the very structure of NMET before financial incentives for JVs with junior exploration companies can yield the desired results.

More so, considering the poor performance of fund utilisation from NMET, which with a corpus of Rs10-billion, has been able to release funds to only 62 projects since the fund was floated in 2015.

As per current norms, exploration expenses from NMET are released by the government only on completion of exploration projects. This provision is unlikely to find many takers since projects will still be starved of risk funding during the course of its implementation, although a section of the Ministry maintains that this is expected to be tweaked and liberalised once the new National Mineral Policy, currently in the works, is announced within the next two months.