Govt introduces Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, to tap vast offshore mineral resources

In a bid to harness the untapped potential of its vast offshore mineral resources, the government has announced the introduction of the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, in Parliament. The proposed legislation aims to establish a fair and transparent mechanism for the development and regulation of mineral resources in India's territorial waters, continental shelf, exclusive economic zone, and other maritime zones. 

India's unique maritime position with an extensive coastline touching nine coastal states and four Union territories, along with its two million square kilometers of exclusive economic zone, offers a treasure trove of offshore mineral resources. However, previous efforts to allocate offshore blocks faced challenges due to a lack of a proper legal framework and pending litigations over block allocations. 

The proposed amendment takes inspiration from the success of the Mines and Minerals (Development and Regulation) Act, 1957, which introduced the auction method for onshore mineral resource allocation in 2015. Since then, hundreds of mineral blocks have been auctioned, generating additional revenue for state governments through auction premiums. 

 
Key features of the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, include — 

1) Auction-based Allocation: The Bill proposes to grant production leases to the private sector solely through auction via competitive bidding, ensuring a transparent and non-discretionary process for allocation. 

2) Government Reservation: Mineral-bearing areas reserved by the Central Government will receive operating rights without competitive bidding, granted to government entities or corporations.  

3) Composite Licence: The introduction of a two-stage operating right, which involves exploration followed by production operations, will also be auctioned through competitive bidding exclusively to the private sector. 

4) Atomic Minerals: Exploration licences or production leases for atomic minerals will be exclusively granted to government entities or corporations.  

5) Fixed Lease Period: Similar to the Mines and Minerals (Development and Regulation) Act, 1957, the Bill sets a fixed production lease period of fifty years, eliminating the provision for lease renewals.  

6) Area Limits: To ensure fair distribution, the Bill will specify rules that limit the area a person or entity can acquire concerning specific minerals or associated mineral groups. 

7) Offshore Areas Mineral Trust: An Offshore Areas Mineral Trust will be established to maintain a non-lapsable fund under the public account of India, aiming to fund exploration, disaster relief, research, and work for the benefit of those affected by exploration or production operations.  

8) Timelines and Transfer: The Bill introduces specific timelines for commencement and re-commencement of production after the execution of a production lease. Additionally, it enables the transfer of composite licences or production leases to promote ease of doing business. 

9) Environmental Protection: The Central Government will frame rules to conserve and systematically develop minerals in offshore areas while ensuring the protection of the environment from pollution caused by exploration or production operations. 

10) Strengthened Penalties: The Bill proposes an increase in fines for illegal mining and other related offenses to deter illegal activities.  

The introduction of the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023, is a significant step towards harnessing India's offshore mineral wealth for the nation's developmental needs while ensuring a transparent, sustainable, and environmentally responsible approach to resource allocation.