Indian provinces rush to float exploration companies

KOLKATA (miningweekly.com) - Indian provincial governments are rushing to establish their own mineral exploration companies.

Faced with the opening up of mineral exploration to private investors and the imperative to upgrade explorations levels before putting mineral blocks up for auction, several mineral-rich provinces, such as Odisha, Rajasthan and Madhya Pradesh, were in the process of floating specialised exploration companies.

First off the block has been Odisha, which was establishing the Odisha Mineral Exploration Corporation. Initially, the entity would be floated as a wholly-owned subsidiary of the provincial government-owned mining company Odisha Mining Corporation, a local government official said.

However, the government would keep open the option of roping in a strategic domestic or foreign investor at a later stage, based on the progressive requirement of specialised mining technology or funding, he added.

The Odisha government initiative was also a result of the Ministry of Steel and Mines directing that only iron-ore reserved with G2 level of exploration would be put up for auction and not blocks with G3 level, a government official said.

He said that several iron-ore provinces, such as Odisha and Jharkhand, had approached the Ministry seeking a relaxation to enable the provinces to add iron-ore blocks with G3 level exploration to the list of reserves up for auction, by September this year.

The immediate impact of this would be on the 12 mineral blocks put up for auction by the provincial government of Odisha, all of which had achieved only the G3 level of exploration, he said.

Of these blocks, six were iron-ore reserves and the provincial government would need to establish exploration levels through the Geological Survey of India or Mineral Exploration Corporation, both government-owned exploration agencies, before the blocks could be put up for allocation to user industries, he added.

However, if more mineral blocks were to be put up for auction after completing G2 level of exploration, the current limited number of exploration agencies would not suffice, he said.

According to an official in the Ministry of Mines, the government would shortly be unveiling the New National Mineral Policy 2016, which would lay down incentives and guidelines to encourage setting up of provincial level mineral exploration agencies and even prompt them to enter into equity and strategic collaborations with foreign standalone mining and exploration companies to ensure the introduction of the latest exploration technologies into the country.