In a significant development, the Ministry of Mines has released draft rules for public consultation regarding the auction of offshore mineral blocks. Administering the Offshore Areas Mineral (Development & Regulation) Act, 2002 (OAMDR Act), the ministry aims to enhance the development and regulation of mineral resources in India’s territorial waters, continental shelf, exclusive economic zone, and other maritime zones.
The recently amended OAMDR Act, effective from August 17, 2023, brings about substantial changes, ushering in a transparent and non-discretionary auction process for the allocation of operating rights in offshore areas. Among the key amendments is the establishment of a trust to address the concerns of mining-affected persons, an emphasis on increased exploration, and the provision of relief in the event of disasters. Additionally, the amendment eliminates the process of discretionary renewals, introduces a uniform lease period of fifty years, and facilitates the easy transfer of composite licenses and production leases.
Identifying specific blocks in the exclusive economic zone beyond territorial waters, the ministry focuses on minerals such as lime-mud and poly metallic nodules. In a collaborative effort to avoid project overlapping, the ministry has invited comments and inputs from concerned ministries and departments.
To implement the amended Act, the Ministry of Mines has crafted two draft rules: Offshore Areas Mineral Auction Rules and Offshore Areas Existence of Mineral Resources Rules. These drafts, available for public review until January 25, 2024, on the ministry’s official website, seek stakeholder feedback for further refinement.
The draft Offshore Areas Mineral Auction Rules draw inspiration from the Mineral (Auction) Rules, 2015, framed under the MMDR Act. Notable features include the adoption of an ascending forward online electronic auction for the grant of composite licenses and production leases.
Under these rules, an upfront payment for production leases is proposed, equivalent to 0.50% of the value of estimated resources or ₹100 crore, payable to the Central Government in three instalments. Performance security amounts vary based on the type of lease, with net worth requirements not exceeding ₹200 crore for production leases and ₹100 crore for composite licenses. For blocks with unassessable mineral resources, the net worth requirement is set at ₹25 crore.
The draft Offshore Areas Existence of Mineral Resources Rules, modelled on the Minerals (Evidence of Mineral Contents) Rules, 2015, outline exploration norms for various minerals and deposits. The proposed rules suggest a minimum G2 level of exploration for considering a block for auction for production leases. Notably, Construction Grade Silica Sand and Lime Mud or Calcareous Mud blocks may be auctioned at G3 level of exploration. Composite licenses, however, require exploration up to G4 level or the identification of mineral potentiality.
