India’s mining policy shift

Last Updated09/08/2023

Recently, the Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023.

Objective: To attract private sector investment in the exploration of critical and deep-seated minerals in the country.
It puts six minerals, including lithium into a list of “critical and strategic” minerals.
The exploration and mining of these six minerals, previously classified as atomic minerals, were restricted to government-owned entities.

The clean energy transitions of countries including India, seeking to meet their net-zero emission goals, are contingent on the availability of critical minerals and rare earth elements (REEs).
These are also crucial for the manufacture of semiconductors used in smart electronics; defence and aerospace equipment; telecommunication technologies and so on.
The lack of availability of such minerals or the concentration of their extraction or processing leads to import dependency, supply chain vulnerabilities, and even disruption of their supplies.

As per figures quoted by the Ministry, India is 100% import-dependent on countries including China, Russia, Australia, South Africa, and the U.S. for the supply of critical minerals.
India also depends largely on imports for deep-seated minerals like gold, silver which are difficult and expensive to explore and mine as compared to surficial or bulk minerals.

The primary step to discovering mineral resources and eventually finding economically viable reserves is mineral exploration, which comes in various stages before mining.
The stages of exploration are divided as per the United Nations Framework for Classification of Resources
- G4 (Reconnaissance)
- G3 (Prospecting)
- G2 (General Exploration)
- G1 (Detailed Exploration)
It is estimated that India has explored just 10% of its Obvious Geological Potential (OGP), less than 2% of which is mined.
Also, India spends less than 1% of the global mineral exploration budget.
Exploration requires techniques like aerial surveys, geological mapping, and geochemical analyses.
- These are highly specialised, time-intensive and monetarily risky operations with less than 1% of explored projects becoming commercially viable mines.

The Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957 is the primary legislation governing mining in the country.
It has been amended several times since its enactment including recently in 2015, 2020, and 2021.
In 2015, the MMDR Act was amended to allow private companies to participate in government auctions for Mining Leases and Composite Licences (CLs).
However, due to the Evidence of Mineral content (EMT) rule, only government-explored projects were auctioned, limiting private sector involvement.
It also permitted private firms to register as exploration agencies, with the National Mineral Exploration Trust (NMET) funding for G4 to G1 exploration.
However, private participation remained limited.

The Bill omits at least six previously mentioned atomic minerals from a list of 12 which cannot be commercially mined.
Being on the atomic minerals list, the exploration and mining of these six - lithium, beryllium, niobium, titanium, tantalum and zirconium, was previously reserved for government entities.
The Act prohibits pitting, trenching, drilling, and sub-surface excavation as part of reconnaissance, which included mapping and surveys.
However, the Bill allows these prohibited activities.
It also proposes a new type of licence to encourage reconnaissance level and or prospective stage exploration by the private sector.
- This exploration licence (EL), for a period of five years (extendable by two years), will be granted by the State government by way of competitive bidding.
- This licence will be issued for 29 minerals specified in the Seventh Schedule of the amended Act, which would include critical, strategic, and deep-seated minerals.
It also reserves the conduct of auctions for composite licence and mining lease for specified critical and strategic minerals for the central government.