Indian Government to Auction Exploration Rights for Rare Earth Prospects
Experimental auction aimed at expediting development of nation’s resources
In March the Indian government announced plans for an experimental auction of several rare earth deposits in the nation in a bid to expedite development of that nation’s resources. The decision comes as part of a broader mineral asset auction in the nation covering everything from gold, diamond, iron ore, base metal, rare earth, and other known mineralization in 22 states.
Company willing to explore a block for lowest royalty wins exploration rights
To fuel the initiative, the Geological Survey of India has identified 100 blocks, each around 100 square kilometers in size, that qualified exploration companies can bid on in a ‘reverse auction’. Companies willing to explore a block for the smallest share of royalties will win the block for exploration.
Should mineral reserves later be defined on a block, the block will subsequently be auctioned to qualified mining companies, which will pay royalties to the appropriate state governments for a 50 year period. If mineralization is not discovered on a block, the government will compensate mineral explorers through a fund established to support exploration activities.
Only 10% of nation has been explored for mineral deposits
The government expects the initiative will transform the Indian mining industry in the coming decade since only an estimated 10% of the nation has been explored for mineral deposits versus nearly 100% in nations like Australia.
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