New offshore mining regulations permit lease surrender after 10 years

28 Oct 2024 CW Team

Published on October 17, these rules have taken immediate effect, detailing the procedures for obtaining operating rights and managing mineral resources in designated offshore zones.

The Federation of Indian Mineral Industries (FIMI) has welcomed the initiative, viewing it as a significant advancement since the Offshore Areas Mineral (Development and Regulation) Act of 2002. “The option to return the lease if it becomes non-viable will enhance industry confidence. This approach should also be applied to onshore mining,” stated B K Bhatia, additional secretary general of FIMI.

This announcement precedes India's inaugural offshore mineral auction, with 10 blocks up for bidding. Mines Secretary V L Kantha Rao noted in September that the blocks, located on both the East and West coasts of India, will include sand, lime mud, and polymetallic nodules.

The new rules stipulate that offshore areas will be available for mineral exploration and production only after being officially notified in the Gazette by the administering authority. Priority access will be granted to government entities or corporations for securing operating rights in reserved offshore zones.

Lease durations are specified for different entities, with production leases for government bodies set at 50 years. Composite licenses, allowing both exploration and production, will be valid for three years. Private companies can also secure exploration and production leases through a competitive auction process.

To enhance transparency in mining operations, lessees must report any mineral discoveries outside their original production lease within 60 days. They are prohibited from extracting or disposing of these newly discovered minerals until they update their production lease deed accordingly.

These regulations aim to ensure a structured approach to offshore mineral exploration while maintaining transparency and regulatory compliance.

The Centre has announced the Offshore Areas Operating Right Rules, 2024, facilitating India's first offshore mineral auction and regulating the exploration and production of minerals in offshore regions. Under the new regulations, lessees can surrender their entire lease area after 10 years if production operations are found to be uneconomical. Published on October 17, these rules have taken immediate effect, detailing the procedures for obtaining operating rights and managing mineral resources in designated offshore zones. The Federation of Indian Mineral Industries (FIMI) has welcomed the initiative, viewing it as a significant advancement since the Offshore Areas Mineral (Development and Regulation) Act of 2002. “The option to return the lease if it becomes non-viable will enhance industry confidence. This approach should also be applied to onshore mining,” stated B K Bhatia, additional secretary general of FIMI. This announcement precedes India's inaugural offshore mineral auction, with 10 blocks up for bidding. Mines Secretary V L Kantha Rao noted in September that the blocks, located on both the East and West coasts of India, will include sand, lime mud, and polymetallic nodules. The new rules stipulate that offshore areas will be available for mineral exploration and production only after being officially notified in the Gazette by the administering authority. Priority access will be granted to government entities or corporations for securing operating rights in reserved offshore zones. Lease durations are specified for different entities, with production leases for government bodies set at 50 years. Composite licenses, allowing both exploration and production, will be valid for three years. Private companies can also secure exploration and production leases through a competitive auction process. To enhance transparency in mining operations, lessees must report any mineral discoveries outside their original production lease within 60 days. They are prohibited from extracting or disposing of these newly discovered minerals until they update their production lease deed accordingly. These regulations aim to ensure a structured approach to offshore mineral exploration while maintaining transparency and regulatory compliance.

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