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Ministry of Mines' Scheme for Partial Reimbursement of Exploration Expenses

29th June, 2024 Economy

Ministry of Mines' Scheme for Partial Reimbursement of Exploration Expenses

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  • The Ministry of Mines has introduced the Scheme for Partial Reimbursement of Exploration Expenses to accelerate mineral exploration efforts in India.
  • Launched on June 24, the scheme aims to alleviate the high costs associated with exploration while promoting the discovery of critical minerals essential for the country's economic growth.

Objective and Overview

  • The scheme offers a significant incentive by providing a 50% reimbursement on exploration expenses incurred by license holders.
  • It specifically targets critical minerals, with a maximum reimbursement cap set at Rs 20 crore per licensee.
  • This financial support aims to encourage extensive and systematic exploration activities across the country.

Conditions and Incentives

  • Under the scheme, license holders can potentially increase their reimbursement cap to Rs 24 crore by auctioning a G2 (general exploration) block for mining lease within three years from obtaining the exploration license.
  • The funding for these incentives is sourced from the Rs 5,000 crore National Mineral Exploration Trust (NMET), ensuring robust financial backing for exploration ventures.

Repayment and Funding Mechanism

  • License holders are required to repay the reimbursed amount over a period of ten years, commencing from the initiation of mineral production or from lump sum payments received.
  • If a licensee opts for a lump sum payment, the entire amount must be repaid to NMET within one month of receipt.
  • Despite the repayment requirement, there are no restrictions on the number of applications, ensuring that all qualifying applicants receive funding as per the scheme's guidelines.

Policy Context and Aim

  • Embedded within the National Mineral Exploration Policy (NMEP) of 2016, this scheme underscores the government's commitment to leveraging private sector expertise, technology, and financial resources for mineral exploration.
  • The NMEP aims to reduce exploration risks, attract both domestic and international exploration companies, and enhance India's self-reliance in mineral resources.

Legislative Framework and Amendment

  • The scheme operates under the framework provided by the Mines and Minerals (Development and Regulation) Act, 1957, which was amended in 2023 to introduce new concessions for exploring 29 critical and deep-seated minerals listed in the Seventh Schedule of the Act.
  • This legislative amendment is pivotal in facilitating private sector participation by recognizing the economic significance and technological requirements of these minerals.

Operational Details and Implementation

  • Eligibility for the scheme extends to all exploration license holders, including the 22 notified private exploration agencies (NPEAs) and other entities yet to be notified.
  • License holders must submit their exploration expense reimbursement proposals within six months of receiving their exploration license to avail of the scheme's benefits.
  • The guidelines ensure that reimbursement decisions do not affect the obligations of license holders as stipulated by state governments during the license auction process.

Stage-wise Reimbursement Limits

The scheme outlines a structured approach with six stages of exploration, each eligible for specific reimbursement limits:

  • Geological mapping and sampling: Up to Rs 1.50 crore
  • Geophysical investigations: Up to Rs 3 crore
  • Exploratory drilling: Up to Rs 10 crore
  • Chemical and petrological analysis: Up to Rs 2.50 crore
  • Mineral beneficiation: Up to Rs 1.50 crore
  • Research collaborations and consultancy services: Up to Rs 1.50 crore

Logistics Support

  • To facilitate efficient exploration operations, annual logistics expenses such as establishing camp offices and hiring personnel are reimbursable up to Rs 1.50 crore per year, with a maximum cap of Rs 30 lakh per annum per project.
  • In conclusion, the Ministry of Mines' Scheme for Partial Reimbursement of Exploration Expenses represents a strategic initiative under the NMEP aimed at reducing exploration risks, attracting investments, and fostering sustainable development of India's mineral resources.
  • By incentivizing exploration activities through financial support and operational flexibility, the scheme aims to strengthen India's mineral exploration sector and contribute to its economic and technological advancement.

National Mineral Exploration Policy (NMEP)

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved the National Mineral Exploration Policy (NMEP) in 2016.

The NMEP primarily aims at accelerating the exploration activity in the country through enhanced participation of the private sector. There is a need for comprehensive mineral exploration of the country to uncover its full mineral potential so as to put the nation's mineral resources (non-fuel and non-coal) to best use and thereby maximize sectoral contribution to the Indian economy.

The policy emphasizes on making available baseline geoscientific data of world standards in the public domain, quality research in a public-private partnership, special initiatives for search of deep-seated and concealed deposits, quick aerogeophysical surveys of the country, and creation of a dedicated geoscience database etc.

NMEP has the following main features for facilitating exploration in the country:-

i. The Ministry of Mines will carry out auctioning of identified exploration blocks for exploration by private sector on revenue sharing basis in case their exploration leads to auctionable resources. The revenue will be borne by the successful bidder of those auctionable blocks.

ii. If the explorer agencies do not discover any auctionable resources, their exploration expenditure will be reimbursed on normative cost basis.

iii. Creation of baseline geoscientific data as a public good for open dissemination free of charge.

iv. Government will carry out a National Aerogeophysical Program for acquiring state-of-the-art baseline data for targeting concealed mineral deposits.

v. A National Geoscientific Data Repository is proposed to be set up to collate all baseline and mineral exploration information generated by various central & state government agencies and also mineral concession holders and to maintain these on geospatial database.

vi. Government proposes to establish a not-for-profit autonomous institution that will be known as the National Centre for Mineral Targeting (NCMT) in collaboration with scientific and research bodies, universities and industry for scientific and technological research to address the mineral exploration challenges in the country.

vii. Provisions for inviting private investment in exploration through attractive revenue sharing models.

viii. On the lines of UNCOVER project of Australia, the government intends to launch a special initiative to probe deep-seated/ concealed minerals deposits in the country in collaboration with National Geophysical Research Institute and the proposed NCMT and Geoscience Australia.

In order to implement the recommendations of the NMEP, initially an amount of about Rs.2116 crore over 5 years would be required over and above the annual plan budget of the Geological Survey of India under the Ministry of Mines. The NMEP will benefit the entire mineral sector across the country.

The major impact of NMEP are:-

1) The pre-competitive baseline geoscientific data will be created as a public good and will be fully available for open dissemination free of charge. This is expected to benefit public and private exploration agencies.

2) The collaboration with scientific and research bodies, universities and industry for the scientific and technological development necessary for exploration in public- private partnership.

3) Government will launch a special initiative to probe deep-seated/concealed mineral deposits in the country. Characterizing India's geological cover, investigating India's lithospheric architecture, resolving 4D geodynamic and metallogenic evolution, and detecting and characterizing the distal footprints of ore deposits, would be the main components of this initiative.

4) A National Aerogeophysical Mapping program will be launched to map the entire country with low altitude and close space flight to delineate the deep-seated and concealed mineral deposits.

5) Government will engage private agencies for carrying out exploration in identified blocks / areas with the right to certain share in the revenue accruing to the State government through auction.

6) Public expenditure on regional and detailed exploration will be prioritized and subject to periodical review based on assessment of criticality and strategic interests.


The Ministry of Mines has, in the recent past, taken a series of measures for the growth of the mineral sector, including allowing 100% FDI. However, these initiatives have fetched only limited success. Further, over the years the dynamics of the mineral sector have undergone sea change thereby creating new demands and imperatives. There is a compelling need to provide an impetus to exploration activity in the country. This has prompted the Government to carry out a comprehensive review of its exploration policy and strategy. The amendments brought in to the MMDR Act in 2015 is a step in this direction. The most important feature of this amendment is that mining leases (ML) and prospecting license-cum-mining lease (PL-cum-ML) will be granted only through an auction process. This is expected to bring in transparency, expeditiousness and simplification in procedures in grant of mineral concessions. Against this background, the NMEP has been framed so as to provide a new set of objectives, sense of purpose and direction to exploration within the amended legal framework.


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