Rajasthan, Karnataka launch India’s first exploration licence auction for critical minerals, 4 more states to follow

In a first, two states – Karnataka and Rajasthan – have launched auctions for exploration licences of critical and deep-seated minerals, while four others – Maharashtra, Madhya Pradesh, Chhattisgarh and Andhra Pradesh- are expected to follow suit soon. 

Auctions in Rajasthan and Karnataka were launched on March 6, and they covered critical and deep-seated minerals like gold, copper and lithium among others.

“So six states were in advanced stages to launch auction for exploration licences. Andhra Pradesh, Chhattisgarh, Madhya Pradesh, and Maharashtra are next in line and are expected to launch the auctions in next few days. This is a first for India,” Pralhad Joshi, Union Minister for Mines told businessline during an interaction. 

Joshi had previously handed over 20 blocks for exploration to the States of Andhra Pradesh, Bihar, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Telangana, Uttar Pradesh and Union Territories of Jammu & Kashmir and Ladakh.

According to a Mines Ministry official, Karnataka has launched the auction of one block each of gold, copper and lithium. While Rajasthan launched auction of three blocks – one each of REE (rare earth element), rare metals and potash.

The other states where discussions are in an “advanced stage” cover mineral blocks such as tin, tungsten, REE, vanadium, copper, lithium, potash, PGE (platinum group of elements), diamond, potash and zirconium.

What are exploration licences?

Exploration licenses aim to create an enabling mechanism wherein the Junior Mining Companies will bring in expertise from across the world in acquisition, processing and interpretation of exploration data. They leverage the risk-taking ability in discovery of deep-seated mineral deposits through the adoption of expertise and the latest technologies.

The Centre had earlier in March circulated a model tender document for auction for grant of Exploration Licence. 

The Exploration Licence holder will explore the blocks and identify the areas that can be auctioned for mining lease. 

Mining lease

The blocks explored by the Exploration Licence holder can be directly auctioned for mining leases, which are expected to fetch better revenues to the State Governments.

Preferred bidder in the auction of Exploration Licence shall be selected through reverse bidding. 

The bidders will quote the share they will take in auction premium payable by the mining leaseholder of the blocks explored by them. The bidder quoting lowest percentage bid shall be the preferred bidder for an exploration licence, a Mines Ministry official said. 

The Mines and Minerals (Development and Regulation) Act, 1957, was amended in 2023 to introduce a new mineral concession of Exploration Licence for 29 critical and deep-seated minerals to further boost exploration and mining of critical and deep-seated minerals in the country.

Critical and deep-seated minerals such as Cobalt, Lithium, Nickel, Gold, Silver, Copper are difficult to explore and mine as compared to surficial or bulk minerals, the official said. 

The exploration licence granted through auction shall permit the licencee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals.

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