Incentives for private firms in mining sector

A new mineral exploration policy, which would incentivise private sector participation in the mining sector by offering them share in revenue, and under which the government has identified 100 mines that are to be offered for auction, is to be cleared by the Union Cabinet next week, said highly-placed sources.

Of these 100 mines, 72 are diamond and gold mines, while others have iron ore and limestone reserves, they added. This newspaper had first reported on February 19 that the government is in the process of finalising the mineral exploration policy, under which it has identified mines ranging from 100 square kilometres to 1,000 square kilometres, consisting of gold and diamond as well as iron ore reserves.

The policy, which has been in the works for almost a year now, is part of the Prime Minister’s office’s push towards attracting the private sector in the field of mining, a segment which, for the past several years, had been in limbo as the previous UPA government, in the aftermath of the 2G scam, hardly offered any mining lease to stakeholders.

Sources privy to the development added that the policy is now ready and will be sent for the Union Cabinet’s approval next week. Apart from this, another new initiative of the government, that of giving five-star rating to mines who comply with the environmental norms, is also to be sent for Cabinet’s approval along with the mineral exploration policy, they added. A key highlight of this policy is that successful bidders would be allowed a share in the revenue of the mine which they get hold of and if they are successful in finding adequate reserves in it, sources informed.

Incidentally, the government is keen to attract international exploration companies to participate in the bidding process of these mines. Normally, mines are given through allotment to entities for exploration. However, with the NDA government’s focus on ensuring complete transparency in the process, the auction route has been decided for the exercise, sources added.