India proposes auction route for offshore mining leases

The Indian government has invited comments on proposed amendments to offshore mining legislation, which will allow production leases to be granted only through auction by competitive bidding.

The government currently allocates offshore production leases for blocks containing higher-grade atomic minerals — such as uranium and zircon — as well as non-atomic minerals like chromium, and only to state-controlled entities.

Comments on draft amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002 must be submitted by 11 March, the Ministry of Mines said on 9 February. The proposal also permits production leases to be granted to private-sector and state-controlled firms through auction for the first time.

The draft proposal also includes a provision for granting a composite exploration-cum-production licence. The proposal abolishes the provision for a renewal of the production licence and grants a lease period of 50 years.

But allocation of blocks containing higher-grade atomic minerals will continue to be reserved for state-controlled firms, the ministry said. Blocks containing non-atomic minerals, on the other hand, will be open to private-sector and state-controlled entities. The government will have the right to determine the threshold value for the mineral grade, above which only state-controlled firms will be granted production leases. It will also has the right to reserve any offshore areas for use by state-controlled firms.

The area under a production lease will comprise contiguous standard blocks and will not exceed an area of 15 minutes latitude by 15 minutes longitude, with a cap of 45 minutes latitude by 45 minutes longitude per lessee, according to the proposed amendment.

The proposed amendment also mandates that state-controlled firms will hold a stake of over 74pc in joint ventures with private-sector companies for exploration and production. Selection of the joint ventures will be done through a competitive bidding process.

The ministry first prepared a draft of the amendment in 2017, seeking to grant exploration and production licences through auction, but the plan was subsequently abandoned.

Exploration licence for deep-seated minerals

The Ministry of Mines also separately introduced a proposal to grant exploration licences to private-sector firms for deep-seated and critical minerals.

The proposal amends the Minerals and Mines (Development and Regulation) Act, 1957, which only provided a mining lease for mining operations and a composite licence for prospecting and mining operations, but not for the full range of exploration. The government has invited public comments on the proposal by 22 February.

The purpose of permitting the private-sector to undertake exploration from the reconnaissance stage is to "bring advanced technology and expertise in exploration for deep seated minerals which are difficult to locate and explore and other critical minerals which have not been explored adequately", the ministry said.

The Minerals and Mines (Development and Regulation) Act was first amended in 2015 to allow the leasing of mines through the auction process. A 2021 amendment to the Act allowed mines to sell up to 50pc of their annual mineral production to the market after meeting their own requirements, among other changes. The 2015 amendment also removed the option for mining leases to be renewed, instead putting up the leases for auction.

By Pranav Joshi