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Mineral prospecting gets a leg-up

Under the new policy, mining companies will have to spend a percentage of turnover on social infrastructure as corporate social responsibility, reports Gaurav Choudhury.

business Updated: Apr 10, 2008 23:57 IST
Gaurav Choudhury

The government on Thursday unveiled a new national mineral policy that favoured separation of prospecting from mining and proposed severe penalties for illegal mining.

Prospecting is the act of physically searching for minerals or mineral specimens and the new policy will allow the prospector to invest, find and, eventually, sell data.

Under the new policy, Minister of Mines Sis Ram Ola said, the prospector would have the absolute right to obtain a mining lease in the areas where it had done the requisite work.

This would introduce competition and level playing field by bifurcating the government’s roles as regulator and miner, the minister said.

Ola said the new policy would allow state governments to give preference to a “value adder” in case of multiple applicants for a concession and reduce delays in the grant of mineral concessions.

Under the new policy, mining companies will have to spend a percentage of turnover on social infrastructure as corporate social responsibility. “The policy encourages mining companies to grant stakeholder rights to project affected persons,” he said.

The new policy has advocated moving to an ad valorem royalty system that shares a portion of revenue and has called for an increase in dead rent on unused areas to dissuade idle holding of resources.

Besides, the policy has proposed the setting up of a mining administrative and appellate tribunal and a larger role for existing state mineral development corporations as Mineral Infrastructure Development and Finance Corporations (MIDFICs) for financing mining infrastructure projects through joint ventures and special purpose vehicles.

The policy has also proposed the setting up of a Mineral Development Fund in every state through a portion of the royalty proceeds with the Centre making a matching contribution to fund.

“The new policy seeks to introduce a shift in policy from a ‘conservationist’ approach to an appropriate-use-of-resources approach,” Ola said.