In A First, Karnataka And Rajasthan Launch Auction For Exploration Licence Of Critical Minerals

In a historic first, Karnataka and Rajasthan have commenced the auction of exploration licences (EL) for critical and deep-seated minerals on 6 March. This marks the inaugural auction of such exploration licence blocks in India.

Karnataka has commenced the auction for one block of gold, copper, and lithium, while, Rajasthan has launched auctions for three blocks of rare earth elements, rare metal, and potash minerals.

This significant advancement follows the amendment of the Mines and Minerals (Development and Regulation) Act, 1957 (the MMDR Act), in August 2023, which introduced a new mineral concession of exploration licences for 29 critical and deep-seated minerals, with the aim of bolstering exploration and mining activities within the country.

Critical and deep-seated minerals such as cobalt, lithium, nickel, gold, silver, and copper are difficult to explore and mine as compared to surficial or bulk minerals.

The exploration licence granted through auction shall permit the licencee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals mentioned in the newly-inserted seventh schedule to the MMDR Act.

Further, it is designed to attract junior mining companies, who will bring global expertise in acquisition, processing and interpretation of exploration data and leverage the risk-taking ability in discovery of these mineral deposits through adoption of expertise and latest technologies.

A junior mining company is an exploration company in search of new deposits of gold, silver, uranium or other precious metals.

The exploration licence holder will explore the blocks and identify the areas that can be auctioned for mining lease. These blocks, once explored, can be directly auctioned for mining leases, potentially increasing the revenue for state governments. 

At the 2nd Mining Ministers’ Conference in Bhopal on 22 January this year, Union Minister of Mines, Pralhad Joshi had handed over 20 exploration licence blocks to the states for auction. These blocks contain a diverse range of minerals, including tin, tungsten, rare earth elements, vanadium, diamond, and lithium, among others.

While Karnataka and Rajasthan have become the first states to notify the auction of exploration licence; Andhra Pradesh, Chhattisgarh, Madhya Pradesh and Maharashtra are to follow suit shortly.