New Delhi: In a significant overhaul of the process for allocating offshore mineral resources, the ministry of mines has released a comprehensive set of draft rules under the Offshore Areas Mineral (Development & Regulation) Act, 2002.
This move comes after the recent amendment to the Act on August 17, 2023, which aims to modernize and regulate the extraction of mineral resources in the country’s territorial waters, continental shelf, exclusive economic zone, and other maritime zones.
The newly published draft offshore areas mineral auction rules are modeled on the Mineral (Auction) Rules, 2015, and introduce a transparent, non-discretionary auction process for granting operating rights in offshore areas.
The key highlights include the introduction of an online electronic auction process for allocating composite licenses and production leases. The rules also establish a framework for upfront payments for production leases, calculated as the lower of 0.50% of the estimated resource value or INR 100 crore, payable in a structured manner to the Central Government.
Additionally, the rules specify performance security requirements, setting the amount as the lower of 0.50% of the estimated resource value or ₹100 crore for production leases, and 0.25% of the estimated resource value or ₹50 crore for composite licenses. The rules also cap the net worth requirements for auction participants based on the estimated resource value in each block, ensuring a robust and fair bidding process.
Complementing these auction rules, the Ministry has also drafted the Offshore Areas Existence of Mineral Resources Rules, which set out norms for exploring various types of minerals and deposits. These norms stipulate that a block must undergo at least G2 level of exploration (General Exploration) to be considered for auction for a production lease. For certain minerals like Construction Grade Silica Sand and Lime Mud or Calcareous Mud, the auction process can be initiated at the G3 level of exploration. For the grant of composite licenses, a block should be explored up to the G4 level of exploration or have identified mineral potentiality.Furthermore, the ministry of mines is in the process of developing additional regulations under the OAMDR Act, including the Offshore Areas Mineral Conservation and Development Rules, Offshore Areas Mineral Concession Rules, and Offshore Areas Mineral Trust Rules.