EXPLORATION FOR DEEP-SEATED / CONCEALED MINERALS
(as on 20th March, 2018)
Minerals can broadly be divided into two categories:
(i) Surficial deposits: minerals such as iron ore, bauxite, limestone, dolomite,
manganese, chrome, etc. These minerals are mostly found on surface or
shallow depths, although some of them are also worked underground such
as manganese and chromite in India and iron ore (Kiruna) in Sweden.
(ii) Deep-seated / concealed deposits: minerals such as gold, lead, zinc,
copper, nickel, PGMs, diamond, REE etc. These are mostly deep-seated
or concealed but are also worked open cast such as copper in Malanjkhand,
gold (super-pit mine) in Western Australia.
The definition is thus nebulous. Both categories require detailed exploration
but deep-seated minerals, which are very vital for India, require state-of-the-art
technologies not available in India and heavy financial expenditure.
Most of the discoveries in India have been by chance or old workings such as
lead and zinc in Udaipur (Rajasthan), chromite in Odisha, copper in Malanjkhand
(Madhya Pradesh), bauxite in East Coast, gold deposits in Hutti and Bharat Gold
mines in Karnataka.
Need for detailed exploration
The need for systematic and detailed exploration and development of the deep-
seated minerals can be realised from the following table which demonstrates that the
country in wholly or substantially dependent on their imports:
Table
Import of vital minerals / metals
(Value : in Rs Crore)
Minerals 2013–2014 2014-2015 2015-2016 2016-2017
/ Metals Unit Quantity Value Quantity Value Quantity Value Quantity Value
Copper ores million 2.08 33226.74 1.70 28502.82 1.89 26296.53 1.14 18298.69
and concentrate tonnes
Diamond ‘000 149916 134915.50 151359 125214.09 151535.00 110378.47 159421.05 129595.41
crt
Nickel ores million 0.00134 120.71 0.0041 384.24 0.0032 245.38 0.00106 81.80
and concentrates tonnes
Lead ores tonnes 0.033 388.09 0.039441 384.68 0.0053 26.46 0.0062 31.86
and concentrates
Zinc ores and million 0.033 156.22 0.035 169.38 0.00038 1.87 0.0017 8.66
concentrates tonnes
Gold tonnes 661 166242.62 915 210658.40 968 207487.49 780 184438.75
Platinum Group of Kg 6493 1401.73 7818 1524.79 8460 1375.68 NA NA
Metals
Total 336451.61 Total 336451.61 366838.40 345811.90
Source: Ministry of Commerce and Industry
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Exploration strategy in future has therefore to be oriented towards locating the
resources of these minerals.
Exploration of deep-seated ore deposits, despite its intrinsic uncertainty and
risk, is essentially a sequential procedure, to be explored with the state-of-the-art
technologies which go on evolving depending on ground situation.
Diminishing rate of discoveries
Discovery rates for different minerals are dependent upon ideal geological
conditions which differ for diamond, gold and platinum group of metals.
In a potential geological condition, studies of discoveries made during the
period 1950-2010, have shown that the rate of discovery is directly proportional to the
exploration expenditure.
The number of discoveries per year
used to be about 25 between 1950 and 1990 Worldwide, up to now, only around
15% of kimberlites are diamondiferous
in advanced countries such as Canada, and less than 1% have resulted into
Australia and USA. However, thereafter diamond mines. Worldwide up to now
about 8000 kimberlites have been
despite being the largest spenders in discovered, of which only about 1200
are diamondiferos, resulting in only 67
exploration (Annexure) and latest diamond mines. Thus the discovery
technologies, the rate of discovery has fallen rate for diamond is very low and
therefore the risk of exploration for
in these countries. diamonds is extremely high.
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However, the ratio between the attempts
De Beers India has carried out made by companies and the discoveries
reconnaissance for diamonds over an area
of 80,160 sq.km. on 53 RPs, discovering that have led to development of mines
58 kimberlites. De Beers also carried out
prospecting over 343 sq.km on PLs varies among the 3 precious metals /
granted on RPs in AP. However, none of
the kimberlites were either diamondiferous minerals. In case of diamond and
or of any economic significance. Since platinum, it is 1:1500 to 1:1000; and gold
2000, De Beers and Rio Tinto have
discovered almost 100 kimberlites in India, 1:800 to 1:400.
equivalent to what GSI discovered in the
last 60 years. (Total kimberlites discovered
in India is around 220).
Resource-rich nations averse to
‘spend’ tax payers’ money on exploration
Mineral exploration is a highly
competitive and specialized job. The The exploration work is extremely risky: if
during aerial survey, 1000 anomalies are
expertise and the technology to explore observed, it may be that only 100 anomalies
are worth ground prospecting and it may
and extract these minerals is available
again be that only one out of these 100 turns
with private companies, popularly known out to be worth economic exploitation. The
Governments do not therefore prefer to
as junior exploration companies. Their spend the tax payers’ money on exploration
because it does not want the tax payers’
exploration expertise in most cases is money to be invested in risky and
hazardous ventures like exploration.
linked to a particular mineral or group of
minerals.
Mineral rich countries such as US, Canada, Australia, Brazil, South Africa,
Chile, Mexico etc. are therefore averse ‘to spend’ tax payers money on the risky
venture like exploration.
No mineral-rich country has developed its mining industry on the basis of
government exploration in the last more than 30 years. The government in these
countries create favourable conditions and provide necessary data to the private
exploration companies to explore.
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These countries therefore encourage the private companies to undertake
detailed exploration by providing various incentives such as security of tenure besides
seamless transition of exploration license to mineral concessions and freedom to sell
/ transfer the concessions.
For exploration job, these companies bank on venture capital or hedge funds.
80% of the exploration expenditure is financed by Toronto Stock Exchange and the
balance by other stock exchanges e.g. New York, London and recently Perth.
Indian Exploration Policy
The Ministry of Mines notified Mineral (Non-Exclusive Reconnaissance
Permits) Rules, 2015 on 29 June 2015 which delineates its Exploration Policy.
Rule 3(11) of these Rules provide:
"The grant of a non-exclusive reconnaissance permit over any area shall not
prohibit the State Government from notifying all or any part of such area for
grant of a mining lease or a prospecting licence-cum-mining lease and upon
such notification the validity of all non-exclusive reconnaissance permits over
such notified area will stand automatically terminated.
Further (Rule 4(1) stipulates that
"the holder of a non-exclusive reconnaissance permit may choose to submit its
findings to the State Government and may request the State Government to
conduct auction for grant of a prospecting licence-cum-mining lease or a
mining lease based on such findings.
Finally term and condition no. 4(e) of Schedule II stipulates that
"the NERP holder shall not be entitled to make any claim for the grant of any
Composite Licence or Mining Lease on the basis of non-exclusive
reconnaissance permit".
It will be observed that with these Rules in place, no private sector or FDI will
come for exploration in the country.
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National Mineral Exploration Policy 2016 (NMEP)
(Non-Fuel and Non-Coal Minerals)
For deep-seated / concealed minerals, NMEP 2016 provides
Government will launch a special initiative to probe
deep-seated/concealed mineral deposits. (para 4.1(iv))
Government’s objective is to facilitate, encourage and incentivize
private sector participation in all spheres of mineral exploration.
Government intends to harness the technical expertise,
technological capability and the financial resources of the private
sector to discover and exploit the country’s vast mineral
resources. (para 12.1)
Different options can be exercised in combination or alone to
attract global level exploration agencies for carrying out
exploration especially for concealed and deep seated minerals
like diamond, gold, PGE, nickel etc which require specialized
technical knowledge and the latest technology. (para 12.10)
To achieve private sector participation, Government has also
realised that participation of private sector in exploration depends
on the following:
(a) Availability and free accessibility of comprehensive, pre-
competitive baseline geoscience data;
(b) Incentives structures that provide an appropriate risk-
return scenario; and
(c) Ease of doing business and earning attractive returns
from the investment. (para 12.2)
India is an under-explored country. The country does not have latest
technology and even if we employ some exploration company, there is no guarantee
of discovering world class economically viable deposit. It will therefore be better to
invite junior exploration companies who have technologies and financial strength to
undertake this task. This will avoid spending tax payers’ money and help the country
to become self-sufficient.
For attracting private junior exploration companies, the Government of India
has to make appropriate changes in MMDR Act, 1957 as well as in its
Mineral (Non-Exclusive Reconnaissance Permits) Rules, 2015.
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Way forward : The Government has to ensure that in line with the practice
followed in resource-rich countries:
― Once non-exclusive reconnaissance permit (NERP) is issued in favour
of a party, no area coming within its ambit can be auctioned either for
mining lease (ML) or prospecting-cum-mining lease (PL-cum-ML).
― Whichever holder of NERP comes on the ground first will have the
priority on the area selected by him for detailed exploration.
― The balance area out of NERP can be explored by the other NERP
holder(s), if any.
― In order that the area selected for detailed exploration is not blocked
after a gap of an initial period, there has to be some annual charges
(something on the pattern of dead rent), per hectare (or per sq.
kilometre). These charges can go on increasing after a gap of every two
or three years. These charges are in addition to whatever expenditure
is incurred by the holder of NERP on exploration.
― Last but most important, Government should obtain forest and
environment clearances before granting PL / ML.
\\
Facilitating entry of private Junior Exploration Companies
in mineral exploration
For encouraging private junior exploration companies who have the latest
technologies and necessary financial wherewithal, the Government of India has to
assure that
― the NERP will be seamlessly converted into PL-cum-ML or ML
depending upon data generated during exploration.
― there should be freedom to sell PL-cum-ML or ML to any prospective
buyer
― the NERP / PL-cum-ML / ML holder should have the freedom to enter
into joint venture or partnership with anybody.
― there should be security of tenure with provision to renew the lease if
there is mineral still available in the deposit.
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Annexure
WORLD EXPLORATION EXPENDITURE
Table – I
Exploration Expenditure
Year Companies Amount spent % age increase / decrease
involved (US$ billion) over preceding year
2006 1624 7.1 45.5
2007 1821 9.9 40.0
2008 1912 12.6 26.0
2009 1846 7.32 (-) 42.0
2010 2089 10.68 45.45
2011 2400 17.25 61.52
2012 3500 20.53 19.00
2013 3500 14.43 (-) 29.70
2014 2700 10.74 (-) 26.00
2015 3500 9.20 (-)19.00
2016 1580 7.3 (-) 21.00
2017 1535 8.4 15.06
Source: Metals Economic Group, Canada (For 2006-15)
S&P Global Market Intelligence (For 2016 and 2017)
The exploration expenditure is dependent on the market conditions for a
mineral / metal and swings in favour of one, whose demand and price is more
attractive, than the one whose demand and consequently price is comparatively less
attractive. This will be clear from the following table :
Table – II
Commodity-wise expenditure on exploration
(US$ billion)
Base Metals PGM
Other
Year Gold (copper, nickel Diamond (platinum group Total
Minerals
,lead/zinc) of metals)
3.21 2.28 0.86 0.21 0.57 7.13
2006
(45%) (32%) (12%) (3%) (8%) (100%)
4.10 3.60 1.00 0.30 1.00 9.99
2007
(41%) (36%) (10%) (3%) (10%) (100%)
4.91 5.04 1.008 0.378 1.26 12.6
2008
(39%) (40%) (8%) (3%) (10%) (100%)
3.51 2.64 0.36 0.15 0.66 7.32
2009
(48%) (36%) (5%) (2%) (9%) (100%)
5.45 3.52 0.32 0.21 1.18 10.68
2010
(51%) (33%) (3%) (2%) (11%) (100%)
8.28 5.35 0.52 0.26 2.85 17.25
2011
(48%) (31%) (3%) (1.5%) (16.5%) (100%)
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Base Metals PGM
Other
Year Gold (copper, nickel Diamond (platinum group Total
Minerals
,lead/zinc) of metals)
9.65 6.57 0.62 0.31 3.39 20.53
2012
(47%) (32%) (3%) (1.5%) (16.5%) (100%)
6.64 4.76 0.58 0.14 2.31 14.43
2013
(46%) (33%) (4%) (1%) (16%) (100%)
4.62 3.76 0.54 0.21 1.61 10.74
2014
(43%) (35%) (5%) (2%) (15%) (100%)
4.14 3.13 0.46 0.14 1.33 9.20
2015
(45%) (34%) (5%) (1.5%) (14.5%) (100%)
3.48 2.16 0.28 0.070 0.97 6.97
2016
(50%) (31%) (4%) (1%) (14%) (100%)
4.05 2.38 0.25 0.080 1.19 7.95
2017
(51%) (30%) (3%) (1%) (15%) (100%)
Source: Metals Economic Group, Canada (For 2006-10)
S&P Global Market Intelligence (For 2011-17)
And, finally, which country has spent how much on exploration in last five years:
Table – III
Country-wise expenditure
(US$ billion)
2012 2013 2014 2015 2016 2017
Country % % % % % %
Amount Amount Amount Amount Amount Amount
Age Age Age Age Age Age
Canada 3.29 16 1.88 13 1.51 14 1.28 14 0.97 14 1.11 14
Australia 2.46 12 1.88 13 1.30 12 1.09 12 0.90 13 1.08 13
US 1.64 8 1.01 7 0.75 7 0.74 8 0.49 7 0.64 8
Russia 0.62 3 0.72 5 0.54 5 0.46 5 0.35 5 0.32 4
Mexico 1.23 6 0.87 6 0.75 7 0.54 6 0.42 6 0.48 6
Peru 1.03 5 0.72 5 0.54 5 0.54 6 0.42 6 0.56 7
Chile 1.03 5 0.87 6 0.75 7 0.69 7 0.42 6 0.64 8
South
0.00 - 0.43 3 0.30 3 0.35 4 0.28 4 0.16 2
Africa
China 0.81 4 0.57 4 0.70 6 0.54 6 0.42 6 0.40 5
Brazil 0.62 3 0.04 3 0.30 3 0.27 3 0.28 4 0.24 3
Argentina 0.62 3 - - - - - - - - 0.16 2
DRC - - - - 0.30 3 0.13 2 0.14 2 - -
Other
7.18 35 5.44 35 3.00 28 2.57 27 1.88 27 2.16 28
countries
Total 20.53 100 14.43 100 10.74 100 9.20 100 6.97 100 7.95 100
Source: Metals Economic Group, Canada (For 2011-15)
S&P Global Market Intelligence (For 2016 and 2017)
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2. The above table indicates that India, though considered among mineral-rich
countries, hardly spends anything on exploration. The amount mostly commonly
mentioned is around US$ 15 million annually. This makes India as one of the least
explored countries in the world. Since exploration was not encouraged, there was
hardly any FDI in the mining sector despite the fact that since February 2000, the
mining sector was opened up for 100% foreign direct investment.
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