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

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

Notification 28 Jun 2024 05:33 PM IST Business Standard

The Ministry of Mines has started a programme to partially reimburse licence holders for their exploration costs to expedite mineral development and lower the associated costs. The licence holders must repay the money as soon as mineral production starts.

The Scheme for Partial Reimbursement of Exploration Expenses for Holders of Exploration Licences (EL), introduced on June 24, provides a 50% reimbursement on expenses paid during the discovery of essential minerals, with a maximum cap of ₹20 crore.

The plan parameters allow for an increase in the maximum ceiling to 24 crore if the exploration licence holder auctions a (general exploration) G2 block for a mining lease within three years of its execution and it is successfully auctioned.

The incentives for all selected licensees will be from the ₹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 receiving auction premium shares from any mining leases auctioned based on their exploration.

The scheme's guidelines state that if the EL holder receives a lump sum payment instead of annual premiums, they must repay the total amount to NMET within one month of receiving it.

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 its expertise, technology, and financial resources. The policy encourages and incentivizes private sector participation in discovering and exploiting the country’s mineral resources and includes measures to mitigate exploration risks.

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

The scheme is open to all players, not only the 22 notified private exploration agencies (NPEAs).

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% reimbursement with a maximum cap of ₹20 crore. The guidelines have also outlined specific maximum outlays for each stage in the scheme.

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

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