Parliament has passed the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023. Offshore areas are rich in minerals, and the exploration and extraction of these resources have become increasingly significant for many countries. Read here to learn more.
The Parliament has passed the Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023 which seeks to make amendments to the Offshore Areas Mineral (Development and Regulation) Act, 2002 (‘OAMDR Act’).
The proposed amendment in the Act will bring major reform by introducing auction as the method of allocation of operating rights in offshore areas.
The OAMDR Act, of 2002 came into force in 2010. However, no mining activity has been undertaken in the offshore areas to date. Hence, the Central Government has proposed the present Amendment Bill to bring several reforms in the offshore mining sector.
Offshore Areas Minerals
Offshore mineral resources include both metallic and non-metallic minerals, and they are found on the continental shelves and beneath the seabed.
Oil and Gas:
- Hydrocarbons: Offshore areas are major sources of oil and natural gas reserves. Exploration involves drilling into the seabed to extract hydrocarbons.
- Deepwater Reserves: Advances in technology have enabled the extraction of oil and gas from deepwater reserves.
Metals and Minerals:
- Polymetallic Nodules: Small, potato-shaped lumps found on the ocean floor. It comprises minerals such as manganese, nickel, cobalt, and copper.
- Polymetallic Sulphides: Formed at hydrothermal vents on the ocean floor. They contain valuable metals like copper, gold, silver, and zinc.
- Cobalt-Rich Ferromanganese Crusts: Accumulations on seamounts and the flanks of mid-ocean ridges. They contain cobalt, nickel, and other valuable metals.
Sand and Gravel:
- Aggregates: Offshore areas contain vast amounts of sand and gravel. They are used in construction, replenishing beaches, and for coastal protection.
- Phosphorus-Rich Sediments: Found on the continental shelves, they contain high concentrations of phosphorus used in fertilizers.
Rare Earth Elements (REEs):
- REE-Bearing Minerals: Some deep-sea mud contains concentrations of rare earth elements. They are used in various high-tech applications, including electronics and green energy technologies.
- Seabed mining involves extracting minerals from the seabed using various techniques. Remote-operated vehicles (ROVs) and autonomous underwater vehicles (AUVs) are used for exploration.
- Seabed mining raises environmental concerns, including habitat destruction and potential impacts on marine ecosystems.
International Seabed Authority (ISA)
- The ISA is an international organization established to regulate mineral-related activities in the international seabed area.
- Aims to ensure that these activities are conducted for the benefit of humanity.
Offshore Areas Mineral (Development and Regulation) Act, 2002 (‘OAMDR Act’)
The OAMDR Act in its current form contains scope for discretion and does not provide for fair and transparent allocation of operating rights in the offshore areas.
- The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) was amended in 2015 and 2021 to provide for the allocation of mineral concessions in onshore areas through auction.
- Since its implementation, 286 mineral blocks have been auctioned for a grant of a mining lease or composite license.
- The transparent process has also generated additional revenue sources for the State Governments in terms of auction premiums.
- The introduction of an auction regime through the present amendment in the OAMDR Act is expected to provide the necessary impetus to the sector.
India has a unique maritime position. India’s Exclusive Economic Zone (EEZ) of over two million square kilometers holds significant recoverable resources. GSI has delineated the resources of the following minerals in the offshore areas:
- 1,53,996 million tons of lime mud within the EEZ off Gujarat and Maharashtra coasts.
- 745 million tons of construction-grade sand off the Kerala coast.
- 79 million tons of heavy mineral placers in the inner-shelf and mid-shelf off Odisha, Andhra Pradesh, Kerala, Tamil Nadu, and Maharashtra.
- Phosphorite in the Eastern and Western continental margins.
- Polymetallic Ferromanganese (Fe-Mn) nodules and crusts in Andaman Sea and Lakshadweep Sea.
Offshore Areas Mineral (Development and Regulation) Amendment Bill, 2023
As India aims to become a high-growth economy, it needs to harness its maritime resources to its optimal capacity.
- To harness the full potential of these maritime resources, it is imperative to encourage the participation of the public and private sectors.
- The private sector will bring the necessary expertise and technology to explore and mine the mineral resources present in the EEZ.
The salient features of the Amendment Bill are:
- Two types of operating rights are to be granted under the Act to the private sector only through auction by competitive bidding, viz. production lease, and composite license.
- The composite license introduced in the Act is a two-stage operating right granted to undertake exploration followed by production operation.
- Operating rights to be granted to PSUs in the mineral-bearing areas reserved by the Central Government.
- Provision has been made for the grant of operating rights only to PSUs in the case of atomic minerals.
- Provision for renewal of production leases has been removed and its period is fixed as 50 years on lines similar to the MMDR Act.
- A limit has been introduced on the total area one person can acquire offshore. Now, a person cannot acquire more than 45 minutes latitude by 45 minutes longitude in respect of any mineral or prescribed group of associated minerals under one or more operating rights (taken together).
- To ensure the availability of funds for exploration, mitigation of the adverse impact of offshore mining, disaster relief, research, interest and benefit of the persons affected by exploration or production operations, etc., a provision has been made for setting up of a non-lapsable Offshore Areas Mineral Trust which will maintain a fund under the Public Account of India.
- To promote ease of doing business, a provision has been made for the easy transfer of composite licenses or production leases.
- To ensure a timely start of production from the leases, the bill introduces the timelines for the commencement of production and dispatch after the execution of the production lease.
- Royalty, auction premium, and other revenues from the production of minerals from offshore areas shall accrue to the Government of India.
Significance of Offshore Areas Minerals
- Resource Security: Offshore minerals contribute to a country’s resource security, reducing dependence on imports and ensuring a stable supply of critical resources.
- Economic Growth: The exploration and extraction of offshore minerals can stimulate economic growth by creating jobs, generating revenue through royalties and taxes, and fostering related industries.
- Energy Independence: Offshore areas often contain vast reserves of oil and gas, contributing to energy independence for countries that can extract and utilize these resources.
- Technological Advancements: The development of offshore mineral resources drives technological advancements in extraction techniques, robotics, and deep-sea exploration, benefiting various industries.
- Strategic Importance: Offshore mineral deposits, especially rare earth elements, and strategic metals, hold strategic importance for industries like electronics, defense, and renewable energy.
- Diversification of Resources: Access to offshore minerals allows countries to diversify their resource portfolio, reducing vulnerability to supply disruptions in other regions.
- Global Trade and Commerce: Offshore minerals contribute to global trade and commerce, as countries engage in the export and import of these resources to meet their industrial and economic needs.
- Innovation and Research Opportunities: The challenges of exploring and extracting minerals from the deep sea spur innovation and create opportunities for scientific research and technological innovation.
Challenges of Offshore Mining
- Environmental Impact: Offshore mining activities can have significant environmental consequences, including habitat destruction, disruption of marine ecosystems, and the release of sediments and pollutants.
- Deep-Sea Ecosystem Vulnerability: The deep-sea environment is poorly understood, and mining operations may impact unique and fragile ecosystems, potentially causing long-term harm to biodiversity.
- Technological Challenges: Extracting minerals from extreme ocean depths poses technical challenges, including developing equipment that can withstand high pressure, low temperatures, and corrosive environments.
- Regulatory and Legal Issues: Establishing international regulations for offshore mining is complex, and legal frameworks are still evolving. The absence of a comprehensive legal regime raises challenges related to jurisdiction, liability, and enforcement.
- Resource Allocation Conflicts: Competition for offshore mineral resources can lead to geopolitical tensions and conflicts over territorial claims, particularly in regions with disputed boundaries.
- Economic Viability: The economic viability of offshore mining projects can be uncertain, with high upfront costs, risks associated with exploration, and the need for sustained investment.
- Social Impact: Offshore mining activities may affect local communities, including those dependent on fishing or tourism. The displacement of communities and changes to traditional livelihoods can lead to social challenges.
- Waste Management: The disposal of waste generated during mining activities, such as sediment plumes, presents challenges in managing and mitigating potential environmental impacts.
- Risk of Accidents and Spills: Accidents, such as oil spills or equipment failures, pose a significant threat to the marine environment, wildlife, and coastal communities.
- Lack of International Coordination: The absence of a coordinated international approach to offshore mining may result in disparities in regulatory standards and environmental protection measures.
While offshore areas hold significant promise for meeting global resource demands, the challenges associated with sustainable and responsible exploration and extraction are substantial.
Balancing economic development with environmental conservation, ensuring international cooperation, and developing robust regulatory frameworks are crucial for harnessing the potential benefits of offshore minerals while mitigating their negative impacts.
The responsible and ethical utilization of these resources is essential for the well-being of both current and future generations.
-Article by Swathi Satish