Changes in India's Mining Policy

The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, was just enacted by India’s Parliament.
This measure seeks to increase private sector involvement in mineral exploration and mining, thereby alleviating import dependence and supply chain weaknesses.

Increasing Exploration Rights: The Bill authorises the private sector to participate in the exploration of essential and strategic minerals that were previously reserved for government enterprises.
Exploration Licences (EL): The Bill creates a new form of licence, the EL, for private exploration. Exploration licences will be awarded through competitive bidding for certain important, strategic, and deep-seated minerals.
Money Model: ELs hope to gain money by sharing a portion of the premium paid by the miner after successfully auctioning off a mined deposit.

Critical minerals are elements that are essential to contemporary technology and are vulnerable to supply chain disruptions.
Antimony, cobalt, gallium, graphite, lithium, nickel, niobium, and strontium are among the 22 minerals identified as vital for India.
Vulnerabilities in the Global Supply Chain: Global supply chains for a variety of commodities, including important minerals such as lithium, cobalt, graphite, and rare earth elements, have been found to be vulnerable to shocks, resulting in shortages and rising costs.
Impact on Various Industries: Critical minerals are required for industrial, infrastructure development, and the shift to sustainable energy. They are critical for the development of electric vehicle batteries, semiconductors, wind turbines, and other technical developments.

Import Dependence: India relies extensively on imports for important and long-lasting minerals such as lithium, cobalt, nickel, and rare earth elements.
Supply Chain Disruption: When extraction and processing are concentrated in a few geographical places, such as China’s supremacy in cobalt and rare earth elements, supply chain vulnerabilities might arise.
Demand Forecast: According to a World Bank report, demand for key metals such as lithium and cobalt will nearly double by 2050.

Global Initiatives for Supply Chain Resilience The MSP was developed by major economies such as the United States, the United Kingdom, Japan, and the European Union to maintain supply chain resilience for essential minerals. India joined this collaboration to have access to these resources.
Strategic Lists: Countries are establishing lists of key minerals based on economic demands and supply threats, and these lists are aligned with their industrial strategy. This is done to provide consistent access to these resources.

Mineral exploration is a multi-stage process that begins with reconnaissance and progresses to extensive exploration before mining begins. India’s exploration operations have been led by government bodies, with little engagement from the commercial sector.
Resource Potential: Similar to mining-rich locations, India’s geological setting has the potential for mineral resources. Only a small portion of its obvious geological potential has been exploited.

Incentives and Risks: Private sector involvement in exploration necessitates significant investments and includes inherent risks, necessitating the creation of favourable circumstances and incentives.
Delays in Revenue Generation: The principal source of revenue for private explorers is a portion of auction premiums, which is dependant on successful mine auctioning, which can take a long time due to government clearances.
Challenges of the Auction Process: Auctioning ELs before exploration begins adds uncertainty about future revenue and value estimation.
Supreme Court judgement: In its 2012 judgement, the Supreme Court emphasised the importance of secure utilisation of explored resources, which the new strategy does not guarantee.

Source: https://www.ibef.org/blogs/mining-sector-reforms-and-the-road-ahead