KOLKATA (miningweekly.com) – The Indian government will grant reconnaissance permit (RP) holders a ‘first right of refusal’ in cases where a mineral block is put up for auction wherein the RP holder has established evidence of minerals.

The move is aimed at boosting sentiment among prospective investors, as RP holders would object to competitors bagging mineral blocks that they have established deposits on.

The approval is part of the National Mineral Policy 2019, ratified by the Union Cabinet last week although details of the policy are yet to be put in the public domain.

The policy also provides for a window for the government to take back mineral blocks allocated to government-run mineral companies, which had either not explored the allocated block, or failed to develop the asset and start mining operations within a reasonable period of time.

This is in line with the oil and gas sector, where the government had already identified onshore and offshore fields allocated to national exploration and production majors like ONGC and Oil India, which would be taken back and put up for auction for private investors.

As for laying down government’s intention, the policy dwells on the need for rationalisation of various taxes and levies currently applicable for the mining industry and to align it with global benchmarks ranging from around 12% to 15%. Current cumulative taxes on domestic miners range between 30% and 60%, including local levies, royalties and other mandatory contributions toward the District Mineral Fund and National Mineral Exploration Trust.

The official statement issued by the government, without the policy document per se, said: “The policy proposes to grant the status of ‘industry’ to mining activity to boost financing of mining by private sector and acquisition of mineral assets overseas by the private sector.”

However, in the absence of details, a strategy paper prepared by the National Institute for Transformation of India Commission, the government’s policy think-tank, as a background to the policy, provides some insights into efforts to increase private sector participation in the domestic mining industry.

“Prospective geology in India is broadly similar to that of Western Australia, especially in iron-ore, bauxite, coal, diamonds and mineral sands. But in India, of the area identified as minerals, only 10% has been explored, while it's 95% in the case of Australia, and even an smaller area of just 1.5% is currently mined in India,” the think-tank paper noted, adding that this had lead to the present situation where Indian imports of minerals were seven times higher than domestic output.

Meanwhile, a section of industry remains unimpressed by the policy enunciations.

“The policy is just an extension of mining policy of 2015 with just few additional clarifications. It is unlikely to attract private investments into the sector without any changes in current auction rules,” the Federation of Indian Mineral Industries (FIMI) said in a statement.

“Also the grant of ‘industry status’ to the mining sector will bring it under the purview of the Industrial Disputes Act adding to the plethora of laws and regulations already burdening the sector,” FIMI said.