India’s bold move to unlock dormant mineral wealth

The reform, targeting thousands of mines allocated before 2015 when mineral blocks were allotted without auctions, will allow leaseholders to commercially mine newly-discovered strategic minerals, including lithium, cobalt, and rare earths, which are vital for key sectors including clean energy, automobiles, electronics, and defence.

The government plans to introduce an amendment to the Mines and Minerals (Development and Regulation) Act (MMDR Act) in the monsoon session of Parliament that starts on Monday, the officials cited above said on the condition of anonymity. The new provisions will cover over 2,500 legacy mining leases, many of which are currently idle. The move will unlock their potential to revive operations and extract minerals critical to India’s economic and strategic goals.

Under the proposed norms, the miner will be issued a separate licence through a deemed approval process, without any fresh auctions or additional premiums, the officials said.

A query on the issue sent to the mines ministry remained unanswered till press time.

Currently, miners in India are prohibited from extracting any mineral not listed in their original lease agreement, even if it is found during exploration. This rule is followed in the case of mines allotted by states to mining entities prior to auctions being made mandatory for the allocation of any natural resource. This has led to valuable associated minerals being either ignored or discarded as waste.

In contrast, countries with mature mining regimes—including Australia, Indonesia and Brazil—permit leaseholders to extract all economically-viable minerals within the same block, subject to certain clearances.

Meanwhile, miners can extract any mineral from mines auctioned since 2015 by paying a premium. Since 2015, only about 450 mines have been auctioned so far.

Under the amendments planned, although the miner will be given a separate licence for mining the new mineral, there would be a process of deemed approval, and without any additional premium, one of officials quoted above said.

“Unlike auctioned blocks, currently there is no provision for the inclusion of associated critical minerals in a non-auctioned mining lease. Now, these non-auctioned operational mines would be allowed to mine even critical minerals,” the official added.

Associated critical minerals are strategic minerals, such as cobalt, germanium, and cadmium, that are found in small quantities along with other minerals like lead, zinc, and copper. Rare earth minerals are a subset of critical minerals.

The new framework will enable miners to extract minerals that are designated as critical to the economy, even if those were discovered unintentionally during bulk mining of other mainstream minerals.

According to government data, there were 3,007 mining leases, excluding coal, lignite, petroleum, gas, atomic and minor minerals, in India as of March 31, 2023, covering a total area of 2.82 lakh hectares. These leases, spread across 23 states and Union Territories, were granted by state governments for 34 minerals. About half of them are non-operational. Officials believe that the new policy could encourage the reopening of many of these dormant mines.

India has ramped up its efforts to secure critical minerals in recent years, driven by both domestic industrial demand and geopolitical concerns over China’s dominance in rare earths.

In January, the government approved the National Critical Mineral Mission to coordinate these efforts. Earlier, the MMDR Act was amended in 2023 to allow the Centre to auction mining leases and composite licences for critical and strategic minerals listed under Part D of the First Schedule of the Act.

Following the amendment, the Centre has auctioned 24 critical mineral blocks, including four mining leases and 20 composite licences. Between 2020-21 and the 2023 amendment, a total of 44 critical mineral blocks were auctioned, of which 20 were auctioned by state governments. To date, about 450 mineral blocks have been auctioned, including 24 critical mineral blocks after the MMDR 2023 amendment.

In parallel, the Centre in 2024 decided to take over the auctioning of exploration licences for critical and deep-seated minerals, following poor uptake by states. The move marked the first time that India began offering exploration licences to attract specialized mining and exploration companies to identify new deposits. The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, granted the Centre powers to notify and auction exploration licences for 29 critical and deep-seated minerals.

Despite these initiatives, progress at the state level has been slow and inconsistent.

In 2023, an expert committee set up by the Centre identified 30 minerals as critical to India, including lithium and vanadium.

In January this year, the Union cabinet approved the National Critical Mineral Mission. On 27 June, Mint reported that India plans to introduce a range of measures including the provision of viability gap funding to boost the processing of rare earth elements as the country copes with supply constraints from China.

“Our laws in India explicitly prohibit the mining leaseholder from mining any mineral other than those specified in the lease grant and approved mining plan. This is not the case in countries with successful mining industries, where there is no explicit prohibition. The point is that mining is an exclusive operation, two parties cannot have the lease over any one area. In a situation where there is occurrence of a critical mineral in an existing lease, prohibition to mine the critical mineral will only ensure that the critical mineral stays below the ground or goes as waste,” said Rajnish Gupta, Partner, Tax and Economic Policy Group, EY India.

The mining industry body sees the government’s proposal as a “low-hanging fruit” that could deliver quick results, subject to use of the right technology.

“Extraction of critical minerals from exploration licence, composite licence or mining lease given recently will take anywhere between 5 and 12 years, depending on the kind of licences,” said B.K. Bhatia, director general of Federation of Indian Mineral Industries (FIMI). “Extraction of these important minerals from mining waste or residue could be a low-hanging fruit that could be brought to production quickly. But concerted effort is required to involve technologies that could bring out commercially-viable minerals…”

Apart from domestic resources, India is also looking beyond its borders to secure critical minerals. State-owned firms like Coal India Ltd and Khanij Bidesh India Ltd (KABIL) are scouting for mines abroad. The upcoming MMDR Amendment Bill, 2025, will also include provisions to allow the Centre to use over ₹6,000 crore from the National Mineral Exploration Trust (NMET) for exploration and acquisition of operational mining assets overseas.

At the recent BRICS Summit in Rio de Janeiro, Prime Minister Narendra Modi underscored the strategic significance of critical minerals. “We need to work together to make supply chains for critical minerals and technology secure and reliable. It’s important to ensure that no country uses these resources for its own selfish gain or as a weapon against others,” he had said.

India has also joined hands with the US, Japan, and Australia under the Quad Critical Minerals Initiative, committing to coordinate efforts to diversify and secure mineral supply chains.