First Tranche of Exploration Licence (EL) Auctions

Context:  The Ministry of Mines has launched the first tranche of Exploration Licence (EL) auctions, five months after amending rules to take control of EL auctions from state governments.

What is an Exploration Licence (EL)?

• EL is a permit given to private or government entities to conduct early-stage mineral exploration in specific blocks of land.
• Holders of an EL can survey, test, and assess the presence, quality, and quantity of mineral deposits.
• If viable minerals are found, the block is further auctioned for a Mining Licence (ML), allowing commercial extraction.

Importance of Exploration Licence (EL) Auctions

Reduces Import Dependency

• India imports lithium, cobalt, nickel, and rare earth elements (REEs) crucial for batteries, semiconductors, and defence technology.
• EL auctions will increase domestic mineral production, reducing dependence on China, Australia, and Africa.

Encourages Private Investment in Mining

• Earlier, only government agencies like GSI and MECL conducted exploration.
• EL allows junior mining companies to explore, creating a competitive mineral market.

Fast-Tracks Mineral Discovery

• Private firms can bring advanced exploration technology like AI-based mineral detection, geophysical surveys, and remote sensing.

Boosts Revenue for Government

• Discovered mineral blocks are auctioned for Mining Licences (MLs), generating royalties, premium payments, and revenue for the government.

Key Amendments in August 2023 for EL

Introduction of Exploration Licence (EL)

• Earlier, only the government and PSUs could explore deep-seated and critical minerals.
• The amendment allows private players to obtain EL through auctions.

Transfer of EL Auction Responsibility to Central Government

• State governments were slow in conducting auctions.
• In October 2023, the Ministry of Mines took over the EL auction process to ensure faster and more coordinated exploration.

Reverse Bidding Auction System

• EL is awarded to bidders who quote the lowest percentage of premium to be paid by the final Mining Licence (ML) holder ➡ ️ Encouraging cost-effective exploration.

Validity & Income Benefits for Explorers

• EL holders can benefit for 50 years from mining revenues if they discover viable mineral deposits.

Coverage of Deep-Seated and Critical Minerals

• EL now applies to key minerals such as lithium, gold, copper, zinc, REEs, vanadium, platinum-group elements (PGE), tantalum and diamonds.

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