Offshore Areas Minerals (Development and Regulation) Amendment Bill, 2023

August 4, 2023

The Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, introduced in Lok Sabha on July 27, 2023, signifies a critical step towards enhancing the regulation and promotion of offshore mining activities in India. The Bill proposes several key amendments to the existing Act, aimed at streamlining concessions, encouraging exploration, and ensuring sustainable mining practices in the country’s maritime zones.

Categorizing Offshore Mining Activities

The Act categorizes offshore mining-related activities into three distinct segments: reconnaissance, exploration, and production. This systematic classification enables effective regulation and management of each stage of the mining process, ensuring compliance and efficiency.

Composite Licenses for Exploration and Production

One of the significant reforms proposed by the Bill is the introduction of composite licenses. These composite licenses grant the rights for both exploration and production to the licensee. Under the new provision, the licensee must complete the exploration phase within three years, with a provision to extend the timeline by two years upon application. Once mineral resources are confirmed through exploration, the licensee will be authorized to receive one or multiple production leases for the surveyed region.

Limits on Exploration Area and Lease Validity

To optimize resource allocation and encourage equitable distribution, the Bill imposes specific limits on the exploration area and lease validity. The composite license allows exploration within a maximum area of 30 minutes latitude by 30 minutes longitude. Additionally, the validity of a production lease under the Bill is extended to 50 years, providing long-term certainty to investors and stakeholders.

Mandatory Competitive Bidding

The Bill introduces a mandatory competitive bidding process for certain concessions, ensuring a transparent and fair allocation mechanism. Production leases and composite licenses will now be granted through competitive bidding to private entities, promoting a level playing field and encouraging more extensive participation.

Reserved Areas and Government Control

The Act empowers the government to reserve offshore areas not under any operating right. Under certain conditions, the administering authority is authorized to provide composite licenses or production leases to government companies and joint ventures, as stated in the Bill. Joint ventures are required to be selected through a competitive process, and the government company must own at least 74% of the paid-up share capital.

Atomic Minerals and Strategic Control

The Bill ensures strategic control over atomic minerals, granting exploration, production, and composite licenses exclusively to the government or government companies. The Mines and Minerals (Development and Regulation) Act, 1957, defines atomic minerals to encompass rare earth minerals containing uranium or thorium, pitchblende and uranium ores, and uriniferous allanite, monazite, and other thorium minerals.

Standard Area of Blocks for Offshore Mining

The Bill revises the standard area of blocks for offshore mining. Under the Act, the size of one block is five minutes latitude by five minutes longitude. The Bill decreases this to a measurement of one minute latitude by one minute longitude. Additionally, the Bill sets a limit on the maximum area one entity can acquire under all concessions, restricting it to 45 minutes latitude by 45 minutes longitude.

Establishment of Offshore Areas Mineral Trust

The Bill creates the Offshore Areas Mineral Trust, requiring concession holders to pay a specified amount in addition to any royalty. The funds collected by the Trust will be utilized for exploration in offshore areas, ecological research, and disaster relief, aiming to promote sustainable mining practices.

Enhanced Fines for Offenses

The Bill increases fines for various offenses, making the penalties more stringent. For instance, conducting any mining activity without a permit or license, which is punishable by imprisonment of up to five years and a fine of up to Rs 50,000 under the Act, will now be subject to fines ranging from five lakh rupees to Rs 10 lakh.

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