Impact of New National Mineral Exploration Policy

Introduction

The New National Mineral Exploration Policy was approved on 29th June, 2016 by the Union Cabinet. The new policy aims at drawing the attention of not only the mining companies at home but magnetizing foreign mining companies as well in the exploration field. Its prime motive is to shoot a level up in the exploration activities through increased participation by the private sector. Also, with its enforcement, it has been estimated that it would upsurge private investment in the country’s mineral exploration sector.

History

The National Mineral Exploration Policy was set during the time of liberalisation in the country in the 1990’s and in that period it was termed as the National Mineral Policy. State owned Geological Survey of India and Mineral Exploration Corporation Ltd. looked into the matters and were responsible for its functioning then.

The first National Mineral Policy (NMP) was enunciated by the Government of India in the year 1993 for bringing liberalisation in the mining industry. The first NMP emphasised on acquiring funds and resources such as technology was brought in by the private investors needed for exploration and mining purposes. But this policy failed in its initial attempt due to delays in work and lack of adequate data available in the mining sector.

 

Hoda Committee
A Committee, named Hoda Committee was constituted in 2025 to suggest and recommend measures for the development of mining industry in India.  On Committee’s recommendation, it was collectively decided that NMP 1993 would be replaced by NMP 2008.

NMP 2008 was quite different from the original NMP of 1993. It incorporated changes in roles to be performed by the State and Centre governments. A change, firstly, by taking the responsibility of private sector investment in exploration and mining. Secondly, by ensuring fairness in granting concessions and lastly, by promoting advanced mining, keeping in mind overall sustainable development, i.e. without harming the environment and the people residing in the mining area.

Why NMEP?

The requirement for a new policy must have initiated because of the causes that possibly would have led either to the previous one failing or to introduce new factors for the greater developmental success in the exploration and mining field.

  • For instance, the potential area for exploration has been identified as 10 per cent by the Geological Survey of India but only 1.5 to 2 per cent is actually mined. With a change in policy, remaining potential area can be tapped for future benefit. It is crucial to uncover this potential which will provide expensive minerals such as gold and diamond, metals and other commodities and mining technology to the nation.
  • This New policy will be of immense help in identifying and defining roles of top people involved in the mining sector for example the government, exploration industry, research and academic bodies and financiers. Coordination amongst all these will prove successful in the exploration process and will thus create institutional mechanisms necessary for the related purpose.
  • It objectifies to bring in changes in the legal, regulatory, financial and fiscal fronts so as to attain the best possible outcomes for exploration and estimates the required resources such as funds, human resource, technology and means of extracting the same.
  • It will consider all the actions to be taken before seeking exploration and consequently help in achieving sustainable development and efficiency. The policy aims at bringing the best knowledge and experience, latest and most advanced technology, trained human capital and number of financial resources together under one roof.

Provisions

The Mines and Minerals Development and Regulation Act, 1957 is the main and legal regulatory framework of the exploration and mining sector. When the first NMP was drafted, there were as such no specified provisions associated with exploration activities. Earlier, the act stated only about the prospecting mining in terms of prospecting license and mining operations to be undertaken in terms of a mining lease. But with changing times and due to failure of first NMP, there was a growing need for provisions in the mining sector.

Salient features of the new policy are as follows:

  • Ministry of Mines as before would take care of the whole auctioning process for exploration by the private sector on revenue sharing method. If the exploration is found to be successful, the revenue incurred will be shared by their bidders of those auctionable blocks.
  • Apart from that, state governments will have a major role to play because they will be responsible for identifying mineral blocks to be displayed for the auction.
  • And if the exploration agencies fail to explore any mineral for auction, their exploration expenses will be returned on normative cost basis.
  • Creating basic geoscientific data for the benefit of the public as it will contain open information that is distributed freely, irrespective of any charge.

Impact of New NMEP

There are a number of implications under the new mineral policy. The impact is not alone on the explorer but on the leasing companies as well and is beneficial to the general public also in the following ways:

  • It will certainly pave the way for competition among bidders of potential mineral blocks through the process of e-auction.
  • Since there is considerable amount of risk involved in mining and exploration activities, it will provide an impetus to private investors in this time consuming procedure.
  • Most importantly, there will be rise in investment in exploration and mining due to 100 per cent Foreign Direct Investment in the mining sector. FDI, along with the increase in investment will bring in world class practices in exploration activities. Furthermore, employment opportunities will be generated because of this.
  • The new policy will provide incentives to the explorer, owner of the mining companies will have to pay royalty to the state governments and an equal percent to private exploration companies.
  • It will open new avenues in this field to private exploration companies.
  • It will facilitate distribution of information about mineral data available which will act as a base for the mining companies in calculating the investment.
  • Enablement of the policy would lead global specialist explorers to reach out to our country with modern technology and expertise.
  • And lastly, it may possibly reduce cost of exploration borne by providing useful interpretation of the geoscience data.

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