| New Delhi

Government to amend Offshore Areas Mineral Act to pave way for auctions

Government to amend Offshore Areas Mineral Act to pave way for auctions
The Act does not allow live auctions of reserves located in territorial waters and exclusive economic zones of India. Photo by Reuters.

In an attempt to bring in a more transparent mechanism for allocating offshore mineral blocks, India’s ministry of mines will amend the Offshore Areas Mineral (Development and Regulation) Act, 2002.

The Act is being amended to auction these blocks on the lines of onshore mineral deposits such as iron ore and bauxite which fall under the Mines and Minerals (Development and Regulation) Amendment Act, 2015.

The development comes in the wake of the Indian Bureau of Mines (IBM) recently cancelling exploration licences of 62 offshore blocks awarded to 16 companies as these blocks are located within the Coastal Regulation Zone (CRZ) where mining operations cannot be undertaken.

Also, unlike the 2015 legislation that makes auction mandatory for all non-coal and non-atomic minerals in onshore areas, the Offshore Areas Mineral (Development and Regulation) Act does not allow live auctions of mineral reserves (excluding crude oil and other hydrocarbons) located in territorial waters, continental shelf, exclusive economic zone (EEZ) and other maritime zones of the country.

However, section 29 of the offshore mineral Act allows the central government to make any ‘enactment’, and the same will hold good for all offshore areas which are part of the Indian territory.

The country’s territorial waters extend up to 12 nautical miles from the coast while the EEZs cover around 2.37 million sq. km where India enjoys exclusive legal rights to utilise all its natural resources.

“As per the decision taken by the highest authority, it has been decided to amend the Offshore Areas Mineral (Development and Regulation) Act, 2002. The ministry of mines will soon be floating a draft Cabinet note to seek inter-ministerial comments on the same,” said a senior official from the mines ministry, who did not want to be named.

InfraCircle reported on 4 August about the government contemplating between live-auction and tendering for allotment of offshore mineral blocks.

The amendment may come up for Parliament’s approval in the coming winter session, said another mines ministry official requesting anonymity. However, the process will further delay the allocation, exploration and mining of offshore reserves, the official added.

The National Democratic Alliance government has come up with a National Mineral Exploration Policy which focuses on exploration of deep-seated minerals in onshore areas including gold, silver and base metals.

Queries emailed to the spokespersons of the ministry of mines and IBM on 6 August remained unanswered.

As per the current provisions, offshore exploration licences are granted after applications are received from parties with requisite technical abilities and financial resources to undertake operations based on scientific parameters. In case there’s only one application for a particular offshore area, the administering authority may grant the exploration licence to the applicant. After successful completion of the exploration, parties are considered for production lease.

Experts, however, think that auctioning the offshore blocks will be tough.

“Auction, in case of offshore mineral blocks, will not be that easy. It will also require consent from various other ministries, including defence, environment, petroleum and others (making it a long-drawn-out process),” said former IBM controller general C.S. Gundewar.

The offshore mineral blocks have been identified by the Geological Survey of India that carries out regular surveys in the EEZ and territorial waters to assess resource potential. 

InfraCircle reported on 19 July about the mines ministry’s plan to frame rules for exploration and mining across the EEZ to harness rare earth minerals in the country’s largely unexplored offshore areas, which also contain gold, silver, manganese ore and monazite.

Rare earth elements are used in hi-tech devices such as smartphones, solar panels, wind mills and hybrid car components, with China having a monopoly in rare earth element production. India, too, is trying to shore up its production since its deal with Japan in 2010 to supply rare earths to Tokyo, after China stopped its supplies to that country. 


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