Photo by: Bloomberg
KOLKATA (miningweekly.com) - India has awoken to the need to allow junior miners to play a greater role in mineral exploration and drive much-needed foreign investments in the sector.
The Federation of Indian Mineral Industries (FIMI) has urged the government to frame a policy to promote junior exploration companies to attract foreign and domestic investment into the industry.
FIMI president Hukam Chand Daga said that mineral-rich countries like Canada, Australia, Brazil or Chile do not spend taxpayers’ money on mineral exploration which was fraught with risk.
These countries with highly developed mining industries encouraged junior miners to undertake exploration at their own cost and India should follow the model, Daga said.
He added that the Geological Survey of India, the country’s government-owned mineral explorer, should only be limited to areas where the private sector was averse to go.
In any resource-rich country, the principle of ‘first come, first served’ was cardinal in generating investors’ confidence in putting in money into exploration activities and Indian legislation should, therefore, ensure seamless transitions between prospecting/exploration to mineral concessions, Daga said.
On the contrary, in many cases the lessees have been deprived of mining licences or prospecting licences even after completion of a reconnaissance licence, FIMI observed.
It was pointed out that the share of juniors in mineral exploratory activities across the world had increased from 30% to 50% over the last decade.
According to data available from the Mines Ministry, in India where mineral exploration was the exclusive domain of the government, the absolute investments in exploration averaged Rs400/km2 or about $7/km2 at current exchange rate.
This paled in comparison to exploration investment of Rs22 000/km2, or $359/km2, in Chile, Rs5 310/km2, or $88/km2, in Canada, and Rs1 219/km2, or $20/km2, in Brazil, according to a comparative study of the Mines Ministry.
FIMI pointed out that exploration work in India was limited to depths of between 50 m and 100 m against 300 m in countries like Australia and one of the primary reasons for low exploration investment in the country.