India’s Mining Policy Shift 2023 (UPSC Current Affairs)


India’s Mining Policy 2023, India is highly dependent on imports for most of the 30 critical minerals that are essential to its economy and security. This includes a 100% dependence on China, Russia, the U.S.A., Australia, and South Africa for critical minerals such as beryllium, lithium, nickel, cobalt, niobium, and tantalum.

Why in the news?

  • Recently the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 was passed by the Parliament.
  • It aims to increase private sector participation in the exploration of critical minerals in order to tackle the high risks and costs associated with such projects.
  • According to a World Bank study, the demand for critical metals is expected to rise by nearly 500% by 2050.

India imported nearly $22.15 million worth of lithium in 2021-22 and 5,486.18 lakh units of lithium-ion batteries, costing $1,791.35 million. India is also heavily dependent on imports for deep-seated minerals such as gold, silver, copper, zinc, lead, nickel, cobalt, platinum group elements, and diamonds. These minerals are comparatively more difficult and expensive to explore and mine in comparison to surficial or bulk minerals. In 2022-23, India imported around 12 lakh tonnes of copper (and its concentrates) costing ₹27,000 crore and 32,298.21 tonnes of Nickel worth ₹ 6,549.34 crore.

India has explored just 10% of its Obvious Geological Potential (OGP), of which less than 2% has been mined. India spends less than 1% of the global mineral exploration budget. The Geological Survey of India and other PSUs are responsible for the majority of exploration projects in India but have struggled due to the high expenditure, long duration and risk, and pressure to increase the supply of bulk minerals. Less than 1% of explored projects became commercially viable mines.

The Mines and Minerals Bill 2023 aims to encourage private sector participation in the exploration of critical and deep-seated minerals. The Bill proposes a new type of license to be granted by the state government via competitive bidding (for five years, but extendable by two) to encourage exploration by the private sector. This license will be issued for 29 minerals specified in the Seventh Schedule of the amended Act. Activities in an area up to 1,000 sq km will be permitted under a single exploration license with the licensee allowed to retain up to 25% of the originally authorized area after the first three years after submitting a report to the state government stating reasons for retention of the area.

The Bill also reserves the conduct of auctions for composite license and mining leases for specified critical and strategic minerals for the central government while most auctions are reserved for state governments in the Act.

However, there are some possible issues with the Bill’s proposals. One issue is that private companies with exploration licenses primarily generate revenue from the premium paid by the miner, which would come only after a successfully discovered mine is auctioned and operationalized. However, this process could take years due to bureaucratic red tape or not happen at all. Another issue is that the explorer can not predict how much revenue they will receive as the auction premium would be known only when a mine is successfully auctioned. Finally, it is difficult to auction something for which exploration has not begun such as exploration licenses.

Overall, the Mines and Minerals Bill 2023 is a positive step towards encouraging private sector participation in the exploration of critical and deep-seated minerals in India. However, it is important to address the potential issues with the Bill’s proposals in order to ensure that it is successful in achieving its objectives.

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