KOLKATA (miningweekly.com) – The Indian government has jettisoned plans to bring in legislative changes that would have allowed private miners to mine for minerals offshore.

Instead, the government has decided that all offshore mineral assets will henceforth be reserved for government-owned and -operated exploration and production companies.

Over the last two years, the government has been attempting to bring in legislative amendments that will align the granting of leases for offshore mineral assets with the current legal framework governing onshore mineral mining by private and government miners.

It had been argued within various Ministries that since all mineral assets were mandatorily allocated through the auction route and private miners were eligible to bid and secure mining leases, the same should be permitted in the case of offshore minerals.

The Mines and Minerals (Development and Regulation) Act of 2015 made private miners eligible to bid at auctions and secure mining leases. However, the prevalent Offshore Areas Mineral (Development and Regulation) Act (OAMDRA) 2002, draws a distinction between onshore mineral assets and offshore minerals and in the case of the latter, neither auction, nor private miners are permitted.

The government has in fact prepared several draft amendments to OMADRA proposing to allocate offshore mineral assets to private investors through the auction route. A proposal has also been in the works to offer a composite licence wherein a successful bidder at the auction will be permitted to explore, develop and produce all minerals in the specified blocks as well as all hydrocarbons that might exist in the auctioned block.

It might be noted that in 2010, the then government attempted to allocate 62 offshore mineral blocks to various investors, but since the allocation had not been through a transparent auction, the process got mired in controversy forcing the government to annul the entire allocation of assets.

The government has not abandoned the process of changing the legislative framework enabling auction of offshore mineral blocks of phosphatic nodules, polymetallic nodules, heavy minerals and construction sand, although no official reason has been cited.

Sources say that one of the possible reasons for abandoning auction of offshore minerals, unlike that held for onshore minerals, is that there are far too few domestic companies with experience in offshore mining and it will be a challenge to set eligibility criteria and technical capabilities of possible first time bidders in this mining vertical.