To attract private sector in exploration, the Union Cabinet has approved the National Mineral Exploration Policy (NMEP). The approval has led the government auctioning 100 prospective mineral blocks. To implement the NMEP in totality, an amount of Rs 2,116 crore is required over five years.
Through NMEP, the government wants to attract private firm in exploration, besides involving State-run GSI, MECL and other notified agencies. Moreover, the private entities engaged in carrying out regional and detailed exploration would get a certain share in revenue by way of royalty or premium accruing to the state government in mining operation from the successful bidder after the e-auction of the mineral block. The revenue-sharing could be either in the form of a lump sum or an annuity, to be paid throughout the period of mining lease with transferable rights. Policy also include that if no mineral reserves are found, the exploration expenditure will be reimbursed on a normative cost basis.
In the first phase, government has identified 100 blocks of roughly 100 square meter area, each of which will be auctioned. SBI Capital Markets has been engaged as a consultant to come up with the modalities of the auction. The entire process will take about six months to begin. Further the exploration companies will be given an option of annuity or upfront payment to collect their revenue share. The auctions will be held by the State Governments and they will be getting support from the Centre in the entire process.