Karnataka and Rajasthan Pioneer Auction of Exploration Licences for Critical Minerals

New Delhi: In a landmark move, Karnataka and Rajasthan have taken the lead in the auction of Exploration Licences (EL) for critical and deep-seated minerals. The auctions, launched on March 6, 2024, mark the first instance of Exploration Licence blocks being auctioned in India. Karnataka initiated the auction of one block encompassing Gold, Copper, and Lithium, while Rajasthan launched the auction of three blocks rich in Rare Earth Elements, Rare Metal, and Potash minerals.

The amendment of the Mines and Minerals (Development and Regulation) Act, 1957, through the MMDR Amendment Act, 2023, effective from August 17, 2023, introduced the new mineral concession of Exploration Licence for 29 critical and deep-seated minerals. These minerals, including Cobalt, Lithium, Nickel, Gold, Silver, and Copper, pose greater exploration and mining challenges compared to surficial or bulk minerals. The Exploration Licence, granted through auction, enables licensees to undertake reconnaissance and prospecting operations for these critical and deep-seated minerals.

The Exploration Licence framework seeks to facilitate Junior Mining Companies in harnessing global expertise for the acquisition, processing, and interpretation of exploration data. It aims to leverage their risk-taking ability to discover deep-seated mineral deposits using advanced technologies and expertise.

At the 2nd Mining Ministers’ Conference held in Bhopal on January 22, 2024, Union Minister of Mines, Coal, and Parliamentary Affairs, Pralhad Joshi, handed over 20 blocks of Exploration Licences to various states and union territories. These blocks contained minerals such as Tin, Tungsten, Rare Earth Elements, Vanadium, Diamond, Copper, Zinc, Lithium, PGE, Potash, and Zirconium.

To expedite the launch of the Notice Inviting Tenders (NIT) for the auction of Exploration Licences, the State Governments worked diligently to prepare the blocks. The Central Government provided necessary prior approvals and support. The model tender document for auctioning Exploration Licences was circulated by the Central Government on March 1, 2024. Karnataka and Rajasthan are the first states to notify the auction of Exploration Licences, and Andhra Pradesh, Chhattisgarh, Madhya Pradesh, and Maharashtra are expected to follow suit in the coming days.

Exploration Licence holders will explore designated blocks and identify areas suitable for auctioning Mining Leases. This approach is expected to enhance revenue for State Governments when auctioning these explored blocks for Mining Lease. The auction of Exploration Licences will employ a reverse bidding process to select the preferred bidder based on the lowest percentage bid for the auction premium payable by the Mining Lease holder of the explored blocks.