India's Mines and Minerals Bill 2023: Boosting Critical Minerals Exploration

India's Mines and Minerals Bill 2023 Aims to Boost Critical Minerals Exploration

In a bid to bolster private sector investment in the exploration of vital critical and deep-seated minerals, the Indian Parliament recently passed the Mines and Minerals (Development and Regulation) Amendment Bill 2023. The bill addresses India's reliance on imports for crucial minerals, aligning with global efforts to secure supply-chain resilience and promote domestic mineral exploration.

Global Demand for Critical Minerals: Countries worldwide, including India, are pivoting toward clean energy transitions to achieve net-zero emission goals. This shift necessitates critical minerals like lithium, cobalt, graphite, and rare earth elements (REEs), which are vital for renewable energy infrastructure, electronics, telecommunications, and defense technologies. The World Bank predicts a nearly 500% surge in demand for critical metals by 2050. The concentrated extraction of these minerals leads to supply chain vulnerabilities, as evidenced by recent global shocks.

International Supply-Chain Resilience: Countries such as the US, UK, and EU are working to ensure supply-chain resilience for critical minerals and reduce dependency on countries like China. Initiatives like the Mineral Security Partnership (MSP) aim to achieve this goal. China's dominance in cobalt mines and REEs underscores the need for diversification. To this end, India has identified 30 critical minerals essential for its economic development and national security.

India's Mineral Exploration Challenges: Despite a geologically promising setting similar to mining-rich regions, India heavily relies on mineral imports. The country's mineral exploration efforts have been limited due to insufficient policy support and incentives for private sector involvement. Exploration involves complex and risky operations, resulting in a dearth of economically viable mines. India's existing Mines and Minerals Act has been amended multiple times but hasn't fully addressed these challenges.

Key Provisions of the Mines and Minerals Bill 2023: The bill designates six atomic minerals as "critical and strategic" instead of solely government-reserved. It permits activities like drilling and excavation for reconnaissance purposes. The bill introduces an exploration license (EL), valid for up to five years and extendable for two more, to incentivize private sector exploration. This license covers 29 minerals, including critical, strategic, and deep-seated minerals, and is granted through competitive bidding. Maximum exploration area limits have been specified.

Challenges and Considerations: However, there are concerns about the practicality and timeline of implementing the bill's provisions. The revenue-sharing mechanism for private explorers remains uncertain until after mine auctions. Unlike in other jurisdictions, where explorers can directly sell their discoveries, India's approach requires more clarification. This approach stems from the understanding that companies need assurances of resource utilization to invest significantly in exploration.

In conclusion, India's Mines and Minerals (Development and Regulation) Amendment Bill 2023 aims to catalyze private sector participation in critical minerals exploration, mitigating import dependence and enhancing supply-chain resilience. While the bill introduces promising changes, addressing the challenges and ensuring effective implementation will be crucial for achieving its intended goals.

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