Need clarity on prospecting process in mining policy: Sandur

On the other hand, Hemul Shah of Ashapura Minechem told CNBC-TV18 that the company is positive about the mining blocks’ auction taking place in the next few months. He said the latest amendment calls for auction of mining blocks unlike earlier where private sector explorers used to apply for lease and then mines were allotted on a first-come-first-serve basis. The company will bid for bauxite and iron ore mines, he said.Below is the verbatim transcript of Hemul Shah and Nazim Sheikh's interview with Varinder Bansal and Nigel D’Souza on CNBC-TV18.Varinder: What impact do you see on your company after this mineral exploration policy has been cleared by the cabinet?Shah: The mineral exploration policy which has going to come up is definitely going to mineral industry and especially for us because by virtue of this, we will be able to participate in the auction and can get the mineral resources to our portfolio.Varinder: If I understand this correctly as a private company you don’t participate in any government tenders as of now?Shah: See right now what was happening the mineral lease earlier used to be by virtue of through application, the recent amendment which has came in that all mineral exploration will be available through auction, so that is the reason now we have to participate through auction channel only. Earlier there was a system of making application to the government and on first come first serve they used to allot the area for exploration and then the prospecting and then the converting into the mining lease.Nigel: Do you believe that in fact the timeline before which we could see our first auction, will it be in the next six months, in the next one year and what kind of clarity are you awaiting from the government of India?Sheikh: One thing which is not still clear has Mr Shah also mention is the prospecting is a very, very important take before the auction can take place and it is the prospecting which will decides on the reserves that are available. Without knowing the exactness of the reserves that are available, auctioning is a big question mark number one.Number two is who is it to be going to be given the prospecting licence. The process of choosing the person to do the prospecting is a very important part which is not clear to us. How is the government going to choose who is the agency to do the prospecting, a private player who is interested in doing the prospecting will obviously be the one then who is the favour, who will have an edge over the others at the time of e-auction, he is going to be given a preference at the time of e-auction, so the choice of the prospecting agency itself would results in certain discrimination or discretionary powers being used to identify who is going to do the mining lease ultimately. This aspect is not very clear.Nigel: Just to get your view tomorrow if in fact you all do take some exploration of a particular mine and you find that there is value and suppose your action is restricted to being desperation company, what kind of a percentage of the royalty is will all you be looking at, because the state government will be getting some royalty for that particular mines, so what’s the number you are working with 2-5 percent, what is that number?Sheikh: First of all we would be not interested in doing prospecting if they are not going to get the mining lease.