Launch of Exploration Licence for Critical and Deep Seated Minerals by the States of Karnataka and Rajasthan – A First in the Country

Karnataka and Rajasthan launched auction of Exploration Licence (EL) for critical and deep seated minerals on 06.03.2024. Exploration Licence blocks are being auctioned for the first time in the country. Karnataka launched auction of one block of Gold, Copper and Lithium and Rajasthan launched auction of three blocks of Rare Earth Elements, Rare Metal and Potash minerals.

The Mines and Minerals (Development and Regulation) Act, 1957 was amended through the MMDR Amendment Act, 2023 with effect from 17.08.2023, inter alia, to introduce new mineral concession of Exploration Licence for 29 critical and deep-seated minerals to further boost exploration and mining of critical and deep-seated minerals in the country.

Critical and deep-seated minerals such as Cobalt, Lithium, Nickel, Gold, Silver, Copper are difficult to explore and mine as compared to surficial or bulk minerals. The exploration licence granted through auction shall permit the licencee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals mentioned in the newly inserted Seventh Schedule to the MMDR Act. Further, Central Government has notified the necessary amendments in the rules on 21.01.2024.

Exploration license aims to create an enabling mechanism wherein the Junior Mining Companies will bring in expertise from across the world in acquisition, processing and interpretation of exploration data, and leverage the risk-taking ability in discovery of deep-seated mineral deposits through adoption of expertise and latest technologies.

During the 2^nd Mining Ministers’ Conference held in Bhopal on 22^nd January 2024  Union Minister of Mines, Coal and Parliamentary Affairs, Shri Pralhad Joshi handed over 20 blocks of Exploration Licence to the States of Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Telangana, Uttar Pradesh and Union Territories of Jammu & Kashmir and Ladakh. These Blocks are of minerals such as Tin, Tungsten, Rare Earth Elements, Vanadium, Diamond, Copper, Zinc, Lithium, PGE, Potash and Zirconium.

In order to expedite the launch of NIT for auction of Exploration Licence, State Government worked tirelessly to prepare the blocks for auction and Central Government provided the necessary prior approval for auction to further support and hand hold the State Government, Central Government circulated the model tender document for auction for grant of Exploration Licence on 01.03.2024 to make it possible for the States to notify these EL blocks for auction. The State Government of Karnataka and Rajasthan are the first States to notify the auction of Exploration Licence. Further, Andhra Pradesh, Chhattisgarh, Madhya Pradesh, and Maharashtra are expected to launch the NITs for Exploration Licence in next few days.

The Exploration Licence holder will explore the blocks and identify the areas that can be auctioned for Mining Lease. The blocks explored by the Exploration Licence holder can be directly auctioned for Mining Lease, which will fetch better revenue to the State Governments.

Preferred bidder in the auction of Exploration Licence shall be selected through reverse bidding. The bidders will quote the share they will take in auction premium payable by the mining lease (ML) holder of the blocks explored by them. The bidder quoting lowest percentage bid shall be preferred bidder for exploration licence.