As part of its ongoing strategy to secure critical and strategic minerals, the mines ministry is planning to establish a fund. This fund will support exploration, acquisitions, and investment opportunities. It will also focus on setting up mineral processing facilities abroad.
A Two-Tier Fund Structure
The fund, still in the planning stages, could be modeled after the National Mineral Exploration Trust (NMET) and is likely to have a two-tier structure.
The structure will incorporate a funding provision that may include contributions from both the industry and financial institutions if necessary. The ministry is exploring various options to ensure the fund’s sustainability and effectiveness.
Collaboration with Private Equity and Financial Institutions
Officials are currently in discussions to determine the feasibility of involving private equity (PE) players and financial institutions in the fund.
Additionally, the ministry is considering permitting sovereign wealth funds to invest in the fund. This will be integrated into the broader national critical minerals mission. Efforts to secure loans from multilateral financial institutions are also underway.
A mines ministry official explained, “We are aiming to create a fund that supports investments in mining and exploration, and if needed, facilitates the processing of critical and strategic minerals overseas. We are in talks with private equity players, financial institutions, and Indian mining companies to invest in it, with plans to acquire stakes when projects materialize”.
Legal Framework and Guarantee Options
The ministry is exploring the legalities of this initiative to ensure its smooth operation. In fact, officials have proposed that the fund could, ‘if provisions allow,’ act as a guarantor for the continuity of overseas mining projects by Indian companies. This would help drive forward stalled projects and increase confidence among private investors considering overseas investments.
Potential Use of NMET Funds
Another proposal from the ministry officials suggests using a portion of the existing NMET funds. This would help kickstart the new corpus for funding overseas projects.
However, this would require amending the current Act.
The NMET, which currently holds a corpus of approximately ₹6,000 crore, is used to develop projects in and around mining areas within the country.
Structure and Funding of the NMET
The structure of the NMET includes a two-tier system.
The governing body, chaired by the union mines minister, oversees its operations. The executive committee, led by the secretary, manages the fund’s activities.
As reported by thehindubusinessline.com, the NMET fund is primarily funded through contributions.
These contributions come from mining leaseholders or prospecting licence-cum-mining leaseholders. These contributors pay two percent of the royalty. This is as per the Second Schedule of the Mines and Minerals (Development and Regulation) Act.
