Offshore mineral auction: Polymetallic nodule resource gaps pose challenges

The Ministry of Mines launched its first-ever offshore mineral auction in November. But a key challenge looms: There is no resource data available for seven G4 (reconnaissance) blocks of polymetallic nodules and crusts located off the coast of the Great Nicobar Island.

 

Of the 13 total blocks, three G3 (prospecting) blocks of lime mud off the Gujarat coast contain an estimated 1,712 million tonnes of resources, while three G3 blocks of construction sand off the Kerala coast hold around 335.09 million tonnes.

 

This analysis is based on a report dated December 21 by SBI Caps, the investment banking arm of state-run lender SBI, which is also the transaction advisor for the auction.

 

“Since data on polymetallic nodule resources is unavailable, prospective investors will first need to explore the resources, which is an expensive process. Without a detailed survey, there is a risk that these blocks might remain unattractive to bidders, similar to what was observed with critical mineral blocks, including the highly publicised lithium block in Jammu and Kashmir," said a sector expert on conditions of anonymity.

 

Polymetallic nodules and crusts, abundant in critical minerals like cobalt, nickel, copper, manganese, and rare earth elements, are essential for advanced technologies, including batteries, electronics, and renewable energy systems such as wind turbines and electric vehicles.

 

Construction sand is a crucial component for infrastructure development, used in making concrete, mortar, and other building materials. Lime mud, a calcium carbonate-rich by-product, finds applications in cement production, water treatment, and soil stabilisation.

 

All of these blocks are being offered under composite licences (CL), which require the winning bidders to conduct exploration before mining can begin. The absence of detailed resource estimates increases the uncertainty and risk for potential bidders. The lack of clarity regarding reserves for the polymetallic nodule and crust blocks could deter investor participation.

 

According to the United Nations Framework for Classification of Resources, mineral exploration is divided into four stages: G4 (reconnaissance), G3 (prospecting), G2 (general exploration), and G1 (detailed exploration). Generally, G1 and G2 levels are suited for MLs, allowing licence holders to directly undertake mining, while CL holders engage in both prospecting and mining.

 

The auction was conducted to unlock India’s exclusive economic zone of roughly 2.37 million square kilometres (msk), extending 200 nautical miles (370.4 kilometres) from the baseline of its territorial waters. 

 

The exploration could expand the country’s obvious geological potential area (mineral prognosticate area), which currently spans 688,000 square kilometres.

 

The Geological Survey of India has explored only one-third of the total area and submitted over 30 reports on offshore mineral resources. The ministry has selected and offered the most economically viable blocks for the auction.

 

Offshore minerals, located deep within the Earth’s crust, are more challenging to extract compared to their onshore counterparts. India's offshore reserves include valuable resources such as gold, diamonds, copper, nickel, cobalt, manganese, and rare earth elements.

 

The offshore auctions aim to enhance the domestic availability of these critical minerals, reducing the country’s reliance on imports.   

Key hurdles 

- No resource data available for seven G4 (reconnaissance) blocks of polymetallic nodules and crusts located off the coast of the Great Nicobar Island

- Absence of detailed resource estimates increases uncertainty for potential bidders

- Lack of clarity regarding reserves could deter investor participation

- The auction was conducted to unlock India’s exclusive economic zone of roughly 2.37 million square kilometres