India mines secretary Mr S Vijay Kumar told Reuters that India's draft mining bill will offer a prospecting licence guaranteeing the holder the right to produce 100% of any find, as the country seeks to attract foreign money and technology to its underperforming mining sector. The bill will also create an independent regulator for the sector and should be approved by end-2012.

He said that "There is a dire need to attract capital and attract technology adding India's mineral potential matched resource rich western Australia and southern Africa but exploration had only scratched the surface so far.”

He said that the Large Area Prospecting Licence proposes areas up to 5,000 square kilometres for hunting for resources, allocated for a six year period. Around 570,000 square kilometres of the 3 million square kilometres country has high potential for finds.

He said that "If you find the deposit, you have the mining licence and you go for mining. If you don't find the deposit, you leave empty handed adding that companies would have to hand data from the area to the government.”

Mr Vijay Kumar added that "It is certainly a first that you go from reconnaissance straight to mining.”

India's mining sector has only opened up fully to private investors in recent years and state-run companies have lacked the funds and expertise to probe deeper than the top 50 metres or so where its iron ore and coal reserves are found.

The mining bill should go to the government for approval after possibly a final meeting of a group of ministers on July 7 and could be presented in parliament in August. The bill could take a year or so to make its way through parliament.

The draft mining law also proposes foreign firms share some of their mining profits with local communities as the coalition government tries to reassure its large rural vote natural resources are not being carted away by outsiders, a resentment which Maoist rebels are tapping into in some areas.

(Sourced from ET)