The Ministry of Mines invited comments on amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002.11,12 The Act regulates mineral resources in offshore areas which include Indian territorial waters (up to 12 nautical miles), exclusive economic zones (between 12 and 200 nautical miles along the coast), and other maritime zones.
These areas hold significant amounts of recoverable resources such as crude oil and natural gas, construction sand, and heavy minerals. The draft amendments seek to encourage private participation to explore and mine mineral resources and harness the full potential of these resources.
Key features of the draft amendments include:
▪ Production leases and exploration license: In order to improve transparency in allocating mineral resources, production leases will be granted only through auction by competitive bidding. A composite license, i.e., an exploration-cumproduction lease will also be introduced. Under this license, rights will be granted for undertaking exploration followed by production. Composite license will also be granted only through auction by competitive bidding. Licenses may be transferred to eligible persons as prescribed under the Rules. Further, the period for production lease has been increased from 30 to 50 years.
▪ Resolving Pending Litigations: The Ministry also noted that mineral resources are untapped due to pending litigations over previous irregular allocation of blocks. The draft amendments specify that existing operation, production and reconnaissance rights will lapse once the amendment Act comes into force. Reconnaissance refers to studying an area for military purposes.
▪ Reduction of size of standard offshore mineral block: The size of a standard mineral block to be granted has been reduced to about 3.4 square km from around 85 square km. As per the Ministry, the reduced offshore area is now comparable to provisions in other jurisdictions such as Australia and the Philippines.
▪ Offshore Areas Mineral Trust: A non-lapsable Offshore Areas Mineral Trust (to be maintained under Public Account of India) will be set up to ensure the availability of funds for exploration, mitigation of adverse impacts of mining, and disaster management. The Trust will be funded by royalty paid by lessees.
Comments on the draft amendments are invited until March 11, 2023.
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