India’s mining policy shift

  • Recently, Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 to attract private sector investment in the exploration of critical and deep-seated minerals in the country.

Provisions of the bill

  • The Bill puts six minerals, including lithium — used in electric vehicle batteries and other energy storage solutions — 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.

Import of India’s critical minerals

  • The clean energy transitions of countries including India, seeking to meet their net-zero emission goals, are contingent on the availability of critical minerals such as lithium, which has also been called ‘white gold’, and others including cobalt, graphite, 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 in a few geographical locations 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 like lithium, cobalt, nickel, niobium, beryllium, and tantalum.
  • Also for deep-seated minerals like gold, silver, copper, zinc, lead, nickel, cobalt, platinum group elements (PGEs) and diamonds, which are difficult and expensive to explore and mine as compared to surficial or bulk minerals, India depends largely on imports.

Critical minerals exploration

  • 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 into G4 (Reconnaissance), G3 (Prospecting), G2 (General Exploration), and G1 (Detailed Exploration).
  • Notably, it is estimated that India has explored just 10% of its Obvious Geological Potential (OGP), less than 2% of which is mined and the country spends less than 1% of the global mineral exploration budget.
  • Exploration requires techniques like aerial surveys, geological mapping, and geochemical analyses and is a highly specialised, time-intensive and monetarily risky operation with less than 1% of explored projects becoming commercially viable mines.

India’s mining policy

  • The Mines and Minerals (Development and Regulation) Act (MMDR Act), 1957, the primary legislation governing mining in the country has been amended several times since its enactment including recently in 2015, 2020, and 2021.
  • Later, private companies could also get Prospecting Licences (PL) or Mining Leases (ML), and could even apply for early-stage or greenfield exploration through Reconnaissance Permits (RPs).
  • 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.
  • The amendment also permitted private firms to register as exploration agencies, with the National Mineral Exploration Trust (NMET) funding for G4 to G1 exploration, but private participation remained limited.

Mines and Minerals Bill 2023 – Major Provisions

  • Omits at least six previously mentioned atomic minerals from a list of 12 which cannot be commercially mined – lithium, beryllium, niobium, titanium, tantalum and zirconium; these atmonic minerals were previously reserved for government entities.
  • The Act prohibits pitting, trenching, drilling, and sub-surface excavation as part of reconnaissance, which included mapping and surveys.
    • The Bill allows these prohibited activities.
  • The Bill 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.

Way forward

  • Privatization comes with risks of monopolization and black marketeering. Mining sector already prone to irregularities and corruption.
  • Thus, the Government should design a mechanism to include safeguards.
  • Nothing in the Bill ensures that mineral allocation will be prioritized for public sector companies.
  • The Government must make provisions for allocation to public sector first and the remaining should be allocated to the private companies.