LEGISLATIVE REFORM IN MINING SECTOR AND MINERAL EXPLORATION IN INDIA

On the occasion of GEOSMART INDIA by

Geospatial Media & Communication 1 – 3 March, 2016 NOIDA

D U Vyas GM (Geo. / Tech.) GMDC , AHMEDABAD

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•The excavation of any minerals or rocks in the Country is mainly governed by two basic law 1. Mines & Minerals (Development and Regulation) Act - 1957. 2. Mines Act - 1952. •The MMDR Act - 1957 further developed in to A - Mineral Concession Rule - 1960. This includes the procedure and condition for obtain 1. The Reconnaissance Permit. 2. The prospecting License. 3. The Mining Lease. B. The Mineral Conservation and Development Rule -1988. • This is framed for conservation and systematical development of minerals as well as regulation of mining operations, excavations, storage of minerals Etc. •This rule also lay down guidelines for conserving environment.

Coal Block Auction Rules

2012

MMDR (Amendment) Act, 2015

Mineral Auction Rules, 2015

National Mineral

Exploration Trust Rules

The Mineral (Mining by

Govt Companies) Rules, 2015

Minerals (Evidence of

Mineral Content) Rules 2015

Mineral Conservation

& Development (Amendment)

Rules 2015

Government has introduced key ordinances and rules in recent period

Preface

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The Mines and Minerals (Development and Regulation) Amendment Act, 2015

• Key aspects of the ordinance :

• Bauxite, Iron Ore, Limestone and Manganese ore defined as ‘notified minerals’.

• (First Schedule, Specified minerals , Part :A – Hydro carbones/Energy minerals (Coal & Lignite) Part – B Atomic Minerals, Part – C All Metallic & Non Metallic minerals)

• Mining lease for notified minerals to be allotted through auction process

• Prospecting-cum-mining license can be awarded for areas where presence of minerals has not been identified (for notified minerals as well as other minerals, except for coal, Lignite and atomic minerals).

• Mining lease to be granted for 50 years.(Previously 30 yeras)

• Formation of District mineral foundation(not exceeding 1/3 of royalty) and National Mineral exploration fund (2% of royalty)

• Provision for revival of lapsed lease at central governments discretion

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Minerals (Evidence of Mineral Contents) Rules, 2015

Existence of mineral content for auction of ML under sub-section – 3 of section 10(b) and sub-section – 2 of section 11 of the Act. The level of exploration is G2 to establish 332 mineral resources and a geological study report as per its schedule. Existence of mineral content for auction to grant a composite licence under sub-section – 2 of section 10(b) and sub-section – 3 of section 11 of the Act. The level of exploration is G3 to establish 333 mineral resources and a geological study report as per its schedule. Schedule Part 1 – definitions, Part 2 – Geological parameters for exploration, Part 3 – Norms for different types of deposit, Part 4A – for reporting mineral resources , Part 4B for estimation and reporting of diamonds and other gem stones, Part 5 – content of pre-feasibility report for estimation and reporting of mineral reserve.

Stages of Exploration •Reconnaissance Survey (G-4) – Identification of potential mineral bearing area based on geological, airborne and indirect methods, preliminary field inspection. •Preliminary Exploration (G-3)- Narrowing down of promising mineral bearing area through outcrop identification, geological mapping, geo chemical or geo physical study, wide spread pitting and trenching. •General Exploration (G-2) – Initial delineation of an identified mineral deposits based on surface mapping and surveying. to estimate quantity and quality along with size, shape, structure of deposit. •Detailed Exploration (G-1)- Three dimensional delineation of known deposits by sampling, pitting, trenching and drilling with detailed closed sampling with high degree of accuracy.

Type of License Level of Exploration

For Mining Lease G1

For Composite License G2 or G3 4

Type of deposit G 4 Stage G 3 Stage G 2 Stage G 1 Stage

Stratified / bedded /

tabular

e.g. Iron / Mn ore /

Bauxite / Limestone /

Chromite/ Potash and

Salt beds

Scout drilling Spacing 800 mtrs. BH

for limestone /

bauxite / potash and

salt and 400 mtrs.

spacing for irregular

habit

For limestone /

bauxite / potash and

salt bed spacing of

400 mtrs. and 200

mtrs. for irregular

habit

For limestone /

bauxite / potash and

salt bed spacing of

200 mtrs. and 100

mtrs. for irregular

habit

Lenticular bodies.g. Cu

– Zn – Pb, PGM, Nickel

etc.

Scout drilling Along strike BH

spacing is 200 to 100

mtrs.

Along strike BH

spacing is 100 to 50

mtrs.

Along strike BH

spacing is 50 to 25

mtrs.

Gemstone and rare

metal

Scout drilling 8 to 10 trenches /

sq.km and BH at 200

mtrs.

Trenching at 50 mtrs.

interval and BH 100

to 50 mtrs. spacing

BH spacing closer to

G2

Float or placer deposit

e.g. iron / Mn and

placer

Scout drilling 400 mtrs. along trend

of the deposit and

200 mtrs. across

200 mtrs. along trend

of the deposit and

100 mtrs. across

100 mtrs. along

trend of the deposit

and 50 mtrs. across

EXPLORATION NORMS FOR DIFFERENT TYPES OF DEPOSITS Ref : Schedule Part – III under Mineral (Evidence of Mineral contents) Rules 2015

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It aims to make Mineral/ Mining sector as a strategic, critical component for nation’s manufacturing growth, creating employment, preventing the drain of valuable forex, and propelling growth in some of the most backward states. The main highlights are as under :-

Introduction Baseline Geo-scientific data for mineral exploration Regional and detailed exploration Integration of geological and geo-chemical and geophysical data Creation of national responsibility Technology up-gradation and innovation in mineral exploration Data sharing and accessibility Forest and Environmental concerns Public and Private Investment in mineral exploration Capital market (Financial support for mineral exploration) Utilization of fund under NMET Human Resource Development in mineral exploration Vision for next 10 years

National Mineral Exploration Policy (for non-fuel and non-coal minerals) (NMEP)

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A trust to be known as National Mineral Exploration Trust shall be set up by the Central Government in terms of Section 9C (1) of the Mines and Minerals (Development and Regulation) Act, 1957.

Every holder of mining lease, or a prospecting-cum-mining lease which is in the stage of production through mining, shall pay a sum equivalent to 2% of the royalty paid in terms of the Second Schedule along with the periodical payments of royalty to the concerned State Governments.

Objective of NMET Utilise funds accumulated in NMET fund for regional and detailed exploration Trust shall give priority to strategic and critical minerals Will undertake exploration activities up to a level where the grant of minerals is possible through the procedures as per the Act.

NATIONAL MINERAL EXPLORATION TRUST

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Mineral exploration and development are investigative activities prior to mining. The rewards of successful exploration and development can be large, if a mineral deposit is discovered, evaluated, and developed into a mine. For a mining company, successful exploration and development lead to increased profits. For a local community or nation, successful mineral exploration and development can lead to jobs—often well paying— that otherwise would not exist; To new infrastructure, such as roads and electric power supplies, that are catalysts for broader, regional economic development; and to increased government revenues that, in turn, can be invested in social priorities such as education, health care, and poverty alleviation. But mineral exploration and development carry with them risks, as well. For local communities and governments, the risks come from the possibility that there will be significant external (or spillover) effects from mining—for example, environmental degradation or strains on local communities and social services when there is an influx of new people into a booming mining town. These spillovers may outweigh the benefits from mining if most jobs go to outsiders, environmental degradation or community disruptions are large, tax revenues accrue to national governments and are not returned sufficiently to local communities, or governments spend mining revenues unwisely.

WHY EXPLORATION IN MINING SECTOR ?

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India is a mineral rich country and has favorable geological milieu which is yet to be fully explored, assessed and exploited. Its geological setup is similar in many ways to that of resource rich countries like Canada, Australia, Brazil, South Africa, Chile and Mexico etc. Exploration activities in India are mostly carried out by GSI, MECL, various State DGMs, public sector undertakings (PSU) and private sector entities both domestic and subsidiaries of many global companies. GSI, established in 1851, is the principal agency for geological mapping and regional mineral resource assessment in India. India has a total land area of 3.2875 million sq. km. spread across 5,065 topo sheets and an area of 3.146 million sq. km. is mappable and GSI has covered 3.09611 million sq. km. (98.41%) on 1:50,000 scale till March 31, 2013. GSI has identified 0.571 million sq. km. as Obvious Geological Potential (OGP) area for minerals. A major part of this OGP area is yet to be fully explored. Most of the exploration activities in the country are of conventional type with restricted input from geochemistry, geophysics and remote sensing. The finds so far, are located near the surface (mostly up to a vertical depth of 100 m). Therefore, with fast depletion of easily accessible and shallow or near surface ore bodies and decline in the rate of locating new mineral deposits within shallow depths, the challenge lies in identifying new area for locating near surface deposits and “deep seated” and “concealed/ hidden” ore bodies through modern and sophisticated exploration methods/ techniques on the basis of conceptual studies.

Exploration in India

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METALLOGENIC MAP OF INDIA

• India is a mineral rich country and ranks fourth amongst the mineral potential countries. • According to Geological Survey of India (GSI), around 150 mineral belts with potential mineral zones/ deposits have been identified. • However, the full mineral potential is yet to be explored and assessed, thus offering good opportunities for mineral exploration and mining development. Potential areas for exploration ventures include Gold, diamond, copper, lead, zinc, nickel, radioa ctive minerals, coal, petroleum, etc. • Remote Sensing and Geospatial Modeling techniques have been used for identifying potential areas of mineral occurrences in the country. With the advancements in remote sensing technology, the current research is focused on exploiting hyper-spectral remote sensing and advanced modeling techniques in mineral prospecting.

Obvious Geological Potential Area

Mineral Area (sq. km.) Mineral Area (sq. km.)

Gold 1,02,809 Manganese ore 4,600

Diamond and Precious Stones 3,00,000 Chromite 2,690

Base Metals 1,81,150 Manganese 6,000

Platinum Group of Elements 8,130 Tin and Tungsten 1,300

Iron ore 5,135 Bauxite 32,520 10

GSI has made phenomenal contributions in the mineral sector and is carrying out systematic investigation for mineral resource assessment of the country in geologically potential areas through modern and sophisticated exploration methods involving modern geological mapping techniques, geomorphological and lineament mapping through study of satellite imageries, aero and ground geophysical studies and geochemical mapping. As part of this GSI has initiated extensive programme of modernization on the advice of the Parliamentary Standing Committee on Industries, and as per guidelines laid down by an Expert Panel on Modernization of GSI. The modernization programme is aimed to improve the regional exploration for assessment of natural resources by infusion of latest state of art technology. The technology infusion envisaged during the 12th Five Year Plan period is” •Strengthening of the state of the art equipment in chemical laboratories like ICP-MS, ICP-AES to match world standard in precision and also facilitate logical conclusion of mineral exploration within scheduled time. •Modernization and augmentation of equipment for ground geophysical survey like multi-channel gamma ray spectrometry, multi frequency EM system etc. •High-end petrological instrument for diamond, strategic and PGE exploration. •State of the art drilling machine (reverse circulation, hydraulic etc.).

LATEST TECHNIQUE IN MINERAL EXPLORATION Recent technology infusion envisaged by GSI

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Bands in Visible, Near Infrared, Shortwave Infrared, Middle Infrared from Sensors such as Landsat TM, IRS LISS III, ASTER, SPOT multispectral sensors etc have been extensively used for geological mapping which includes broad lithological mapping, structural mapping mainly lineaments and geomorphological mapping.

Band Ratio techniques are utilized for locating a mineralized zones. Spectral signatures of clay minerals, alteration zones are matched with laboratory spectra for identification of mineralised zones.

Image processing and GIS GIS is used in Raster and vector format to integrate the various thematic layers Geomorphological maps, structural maps and lithological maps and from known sources of mineralized zones . covering mineralized zones are integrated in GIS to extrapolate the regions of interest based on weighted integrated analysis. Extrapolate the information to unknown areas based on weights in unknown areas.

Artificial Neural Network: This technique finds the inter-relationship of various factors and occurrences of data by suitably giving weights to known relationships. Spectral Vector machines : it is a method for classification of data but non-statistical in approach.

DEM generated from stereo images and Interferometry is integrated with landuse/landcover, geomorphology and lithological maps to identify prospective maps.

RS and GIS for mineral exploration (Broad band multispectral remote sensing)

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Visible Near Infrared (VNIR) Iron Oxides (Fe 2+ , Fe3+) Rare Earth Element Oxides Vegetation Short Wave Infrared (SWIR) Carbonates (CO 3 , i.e. Calc, Magn,Dolo , Fe Carb ) Phyllosilicates Sulfates (i.e. Alunite, Jarosite) Al –OH & Fe –OH (i.e. Clay, Muscovite, Chlorite) Mg –OH (i.e. Serpentines, Chlorites, Biotite ,Phlogopite, Amphiboles) Long Wave Infrared (Thermal or TIR) Silicates (i.e. Qtz , Fsp, Gt, Px, Ol, Am, Clays, Micas) Sulfates (i.e. Alunite, Jarosite,, Gypsum, Anhydrite) Carbonates (CO3 ; i.e. Calcite, Magnesite, Dolomite) Phosphates (i.e. Apatite) Vegetation

Spectral properties in RS

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• Hyper-spectral Sensors (also known as Imaging Spectrometers) are a systems technology whereby images of a scene are collected in tens to hundreds of narrow s pectral bands nearly simultaneously. • They represent the next step in the spectral dimension of the evolution of multispectral imaging radiometers currently represented by satellite sensors with broad bands.

Hyperspectral Remote Sensing

• Hyperspectral cubes are generated from airborne sensors like • the NASA's Airborne Visible/Infrared Imaging Spectrometer (AVIRIS), • or from satellites like NASA's EO-1 with its hyperspectral instrument Hyperion.[7] • However, for many development and validation studies, handheld sensors are used.[8]

Image processing Spectral angle mapper used in Hyper spectral RS: based on spectral properties in very narrow bands , it tries to match the spectral properties of unknown to some data library.

Linear mixture modelling using hyperspectral data is used in finding end members (minerals) .

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Radar operates in microwave region-1mm to 1m wavelength.

It is an active system. Radar Remote sensing is widely used for geological

mapping along with data of optical sensors.

Radar signals can penetrate through clouds and can operate day and night.

Normally C-band L band and X band radar antennas have been used for

Radar RS

Radar are sensitive to dielectric properties and surface roughness of

material and therefore yield different properties of materials.

Radar signals can penetrate through vegetation canopy and strike the

underlying surface.

Polarimetric radar yield additional information about materials.

RS and GIS for mineral exploration (Microwave remote sensing-active RS in microwave region)

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Challenges and Deficiency in India

Low exploration spending

• Inspite of high mineral potential, India accounts for only 0.5% of world exploration budget.

• Airborne survey alone cost around 4000 crore, at the current estimates of NMET funds, it would take nearly 8 years to gather PAN India airborne survey through NMET.

Participation of mining companies in exploration

• Only 8 companies active in exploration sector in India; 464 in Canada; 450 in Australia

• Private investment in exploration sector is less than 1% of the total expenditure in contrast to 14% in Canada and 12% in Australia.

• Lack of incentive enabling major mining companies in India to invest in exploration sector

Unavailability of high tech equipment

• Lack of participation of private miners with latest equipment and technology

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Factors

Geologic Factors

Technical Factors

Environmental

Economic Factors

Social

Political

Ownership Contractual matters Regulatory regime

Fiscal regime

are there unanticipated technical problems or complications

associated with mining, mineral processing, and extractive

metallurgy?

Does a mineral resource exist in a region, in what quantities, and of what quality?

Factors affecting the investment decision in Mining Sector

Legal Factor

Operational factors

Nationalization Profit repatriation

Falling out of favour

External factors

NGOs, influence from other states, etc.)

Can a resource be extracted in ways that are consistent with a

nation’s preferences and policies for environmental protection and

local communities ?

Overall, can a mineral resource be extracted at a

profit?

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JUNIOR

EXPLORER S

MEDIUM &

MAJOR EXPLORERS

• Involved in exploration, production and processing • Have deeper technical, managerial, legal and financial

resources • May have political clout, both in the host country and

abroad

• Focus on exploration • Often are pioneers in new areas • Likely to have limited technical, managerial, legal and

financial capabilities • Generally lack political leverage

Size of enterprise may be relevant to risk profile

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Way Forward

Public investment

in Geoscience

Ready access to financial

capital

Increased participation

of mining companies in exploration.

Sustainable and inclusive development

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Key ingredients for exploration

• Creating incentives for investors to allocate scarce financial capital is a critical ingredient in sustaining the exploration activity

Exploration- Global Trend

Capital needs for exploration are increasing

• Exploration in extreme and difficult climates.

• Higher exploration cost for deeper lying deposits

• Cost associated with permits are up.

Risk inherent in exploration are increasing

• Reduced access to land.

• Increased need for excessive community consultation

• Depletion of near surface deposit forcing explorers to explore deep seated deposit.

Reduced risk tolerance in today’s economic climate

• Decrease in commodity prices

• Slowdown of Chinese economy FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015

Global Exploration Budget ($M) 8001.9 11511.2 17240 20527.2 14409 10738.5 8771.3

0

5000

10000

15000

20000

25000Global Exploration Budget ($M)

Source: SNL Financial 20

Trends in Global Exploration Budget-2015 (Countrywise)

The actual inflow of foreign investment in the mining sector in India has been quite low despite the fact that this sector allows 100% FDI since 1993 except coal mines.

1,185.3

1,068.4

717.0

540.4 501.8 499.6

421.2

50.2 13.51 12.18 8.17 6.16 5.72 5.7 4.8 0.57

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

Canada Australia USA China Peru Mexico Russia India

Total Budget ($M) Share of Global Budgets (%)

Source: SNL Financial

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Technique in Mineral Exploration at GMDC

1 10 7

33 29

66

27 25

65

0

10

20

30

40

50

60

702

00

6-0

7

20

07

-08

20

08

-09

20

09

-10

20

10

-11

20

11

-12

20

12

-14

20

14

-15

20

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-…

Tho

usa

nd

met

ers

Drilling (in metres) o Exploration in allotted mines to firmly

establish the nature and quantum of reserves

o On behalf of CGM, GoG, to establish mineral reserves within the state of Gujarat

o 25,100 sq. km. area of Obvious Geologically Potential (OGP) area in the geological terrain of Aravali Fold Belt, is identified

o State has only identified 6 blocks of Limestone for notification of mining lease auction (G-2 level).

In addition to conventional method of exploration, GMDC has adopted using latest technology of RS & GIS in investigation of minerals mainly in bauxite at Jamangar & Kutch (is under progress) Manganese at Panchmahal, Dahod and Baroda districts by incurring about 1.71 crores Rs. Covering 3280 Sq. km. area. Potential business opportunity for GMDC to act as nodal agency for exploration in the state and facilitate the state in achieving the obligatory requirement of mineral auction. Ministry of Mines, Delhi vide Notification dt. 11.12.2015 considered GMDC as an exploration agency under Section 4 of MMDR Act 1957.

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SUMMING UP : Larger area of India is to be investigated for minerals by using latest technology like RS & GIS. More entrepreneurs (large or small) may be promoted for exploring the area with various types of benefits. With the National Mineral Trust and National Mineral Exploration Policy of India will give weightage to the mineral exploration and in turn, new mining projects can come up.

THANKS Contact : geo@gmdcltd.com

INDIA GEOSPATIAL EXCELLENCE AWARD - 2015 TO

GUJARAT MINERAL DEVELOPMENT CORPN. LTD.