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Mines & Minerals Act 2023: Exploration Licence (EL)



  Apr 24, 2024

Mines & Minerals Act 2023: Exploration Licence (EL)



What is an Exploration Licence (EL)?

Answer: An Exploration Licence (EL) is a new type of mineral concession introduced in the Mines and Minerals (Development and Regulation) Amendment Act, 2023. It allows the holder to conduct reconnaissance and prospecting operations specifically for critical and deep-seated minerals. This license is granted through an auction process and is focused on a pre-defined list of minerals critical to various high-tech and strategic industries.

Which minerals are included under the Exploration Licence?

Answer: The Exploration Licence covers a wide range of critical and deep-seated minerals, including copper, gold, silver, diamond, lithium, cobalt, molybdenum, lead, zinc, cadmium, elements of the rare earth group, graphite, vanadium, nickel, tin, tellurium, selenium, indium, rock phosphate, apatite, potash, rhenium, tungsten, and the platinum group of elements, among others proposed to be removed from the list of atomic minerals.

How is the preferred bidder for an Exploration Licence selected?

Answer: The preferred bidder for an Exploration Licence is determined through a reverse bidding process. In this process, bidders quote the percentage of the auction premium they are willing to share with the government. The bidder offering the lowest percentage of their profit as a premium to the government is typically awarded the licence. This method aims to maximize the economic return to the state while ensuring the exploration rights are granted efficiently.

What benefits does the Exploration Licence provide to the exploration agency?

Answer: The exploration agency benefits from holding an Exploration Licence by gaining the right to explore for valuable minerals. Additionally, if the blocks explored under this licence are auctioned for a mining lease, the exploration agency receives a share of the auction premium paid by the mining lease holder. This incentivizes the exploration companies to identify and delineate valuable mineral resources.

How does the Exploration Licence impact foreign direct investment (FDI)?

Answer: The introduction of the Exploration Licence is expected to create a more conducive legal environment for attracting FDI into India’s mining sector. By allowing 100% FDI through the automatic route in exploration and mining of minerals, the amendment encourages junior and major mining companies worldwide to invest in India, bringing in advanced technology, expertise, and capital necessary for the development of the sector.

What are the implications of directly auctioning blocks explored under an EL?

Answer: Directly auctioning blocks explored under an Exploration Licence can lead to better revenue generation for state governments. This method ensures that the blocks are auctioned based on their proven potential, which can attract higher bids and thereby increase the financial returns from mineral resources. This approach also speeds up the transition from exploration to production, contributing to the economy more rapidly.

These FAQs help clarify the new provisions and expected impacts of the Exploration Licence under the Mines and Minerals (Development and Regulation) Amendment Act, 2023, highlighting its role in enhancing the mining sector's efficiency and attractiveness for investments.



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