National Mineral Policy 2006 - Department of Mines

1.32 The NMP, MMDR Act, MCR, and MCDR provide for Central and state organisationsto prospect for minerals but do not lay down separate guidelines for allocation of minesprospected by public agencies. The lack of a clear system for disposal of governmentprospected mineral ore bodies can provide an opportunity for arbitrary practices. In India, themain government bodies engaged in detailed exploration activity are the MECL, whichundertakes promotional exploration on behalf of the government, GSI in a few rare cases, andthe state Directorates of Mining and Geology (DMGs). The current provision for disposal (orallocation) is mainly through discretionary decision by the state governments (in some cases,with the approval of the Centre) on the basis of some very broad parameters. In non-notifiedareas (areas for which applications have not been invited through publication in the officialGazette), state governments are expected to follow the first-come-first-served principle, whileall applications in notified areas (areas for which applications have been invited) are to beconsidered in terms of the parameters laid down in Section 11(3) of the MMDR Act.However, in all cases, the state governments, and in some cases, even the Centralgovernment, are authorised to bypass these provisions at their discretion. It is necessary tointroduce transparency in the allocation of ore bodies either through a tender/auction systemor by spelling out in very precise detail the method of ascertaining who best satisfies therequirements of Section 11(3) and making the same binding. Ideally, a tender/auction systemwould be most suitable inasmuch as such a system would have the additional advantage ofaugmenting state revenues, which is a major concern of the state governments. Thetender/auction system may also be applied to ore bodies in respect of which prospecting datahas come into the public domain after the lock-in period has expired without the prospectorhaving filed a ML application. Hence, subject to the exception mentioned in Chapter 5 (seeparagraphs 5.13 and 5.14), the tender/auction system should be used for disposing of orebodies prospected by State agencies at public expense.1.33 Para 7.12 of the NMP states that efforts will be made to promote small-scale miningfor exploiting small and scattered deposits as the capital required is low and mining isemployment-intensive. One of the geological peculiarities is the occurrence of small mineraldeposits. However, it is also recognised that economies of scale are particularly important formining. Small ore bodies either remain unexploited or are mined intermittently by miners inthe small scale, depending on the price of ore prevailing in the local market, resulting ininefficient or suboptimal mining. While small-scale mining may be allowed to flourishwherever feasible, it has been argued before the Committee that such small deposits that19