Govt offers 50% refund to licence holders for critical mineral exploration

In a bid to accelerate mineral exploration and alleviate the high associated costs, the Ministry of Mines has launched a scheme to offer partial reimbursement of exploration expenses to licence holders. The licence holders are required to repay the amount once mineral production begins.

The Scheme for Partial Reimbursement of Exploration Expenses for Holders of Exploration Licences (EL), launched on June 24, offers a 50 per cent reimbursement on expenses incurred during the exploration of critical minerals, with a maximum cap of Rs 20 crore.

According to the scheme guidelines, the maximum cap can be increased to Rs 24 crore if the exploration licence holder hands over a G2 (general exploration) block for auction for the grant of a mining lease within three years from the execution of the exploration licence and it is successfully auctioned.

The incentives for all selected licensees will be provided from the Rs 5,000 crore National Mineral Exploration Trust (NMET) fund.

However, the EL holder must repay the amount received from the NMET within ten years, in equal annual instalments, starting from the beginning of mineral production and the receipt of auction premium shares from any mining leases auctioned based on their exploration.

If the EL holder receives a lump sum payment instead of annual premiums, they must repay the full amount to NMET within one month of receiving the lump sum payment, the scheme’s guidelines state.

Though EL holders will have to return the money, there is no limit on the number of applications or the scheme’s outlay. “All qualifying applicants will receive funding. There is no limit on the number of applicants or the total outlay,” a ministry official explained.

The initiative is part of the National Mineral Exploration Policy (NMEP) of 2016, which aims to involve the private sector in mineral exploration by leveraging their expertise, technology, and financial resources. The policy encourages and incentivizes private sector participation in discovering and exploiting the country’s mineral resources, and it includes measures to mitigate exploration risks.

“By implementing this scheme, we aim to reduce exploration risks, which will attract both domestic and international exploration companies,” said Union Mines Minister G Kishan Reddy during the launch of the initiative.

The exploration of critical and deep-seated minerals became possible after the 2023 amendment to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).

This amendment introduced a new mineral concession for the exploration of 29 critical and deep-seated minerals listed in the Seventh Schedule of the Act, aiming to encourage private sector participation due to their importance to the national economy and the need for advanced technology in exploration.

The scheme allows optional participation for EL holders granted licences through auction after the scheme's introduction. To avail these benefits, the holders must submit an exploration expense reimbursement proposal within six months of receiving their EL.

Not only the 22 notified private exploration agencies (NPEAs) but any player who is not yet notified can participate in the scheme.

To streamline operations, the guidelines specify that decisions on reimbursement under the scheme—whether accepted, rejected, or disputed — will not impact the obligations of EL holders as per the terms of their EL set by the State Government at the time of auction.

The ministry has divided the exploration exercise into six stages, each eligible for 50 per cent reimbursement with a maximum cap of Rs 20 crore. The guidelines have also outlined specific maximum outlays for each stage in the scheme.

During the geological mapping and sampling stage, an EL holder can seek reimbursement up to Rs 1.50 crore. For geophysical investigations, the reimbursement limit is Rs 3 crore, and for exploratory drilling, it stood at Rs 10 crore.

Additionally, the expenses for chemical and petrological analysis, mineral beneficiation, research collaborations, and consultancy services can be reimbursed up to Rs 2.50 crore, Rs 1.50 crore, and Rs 1.50 crore respectively.

Logistics expenses, which include setting up camp offices and hiring personnel, can be reimbursed up to Rs 1.50 crore annually, with a maximum of Rs 30 lakh per year.

‘Critical’ impetus 
 

Reimbursement for exploration: Rs 20 crore
 

 Geological mapping and sampling: Rs 1.5 crore

 Geophysical investigations: Rs 3 crore

 Exploratory drilling: Rs 10 crore

 Chemical and petrological analysis/mineral beneficiation: Rs 2.5 crore

 Research collaboration/ consultancy/advisory: Rs 1.5 crore

 Logistics: Rs 1.5 crore