• Government to issue a new policy for private companies
• India has significant reserves of rare earth minerals

The region to be earmarked for exploration includes states such as Kerala and Tamil Nadu, according to Kumar, with another 400 square kilometers set aside exclusively for state-run companies to search for uranium and thorium.

Royalties

Following a policy change last year, explorers now have to bid in auctions for the right to mine deposits they find. For critics, that leaves little incentive to scour the world’s seventh-largest land mass for minerals and metals, since the discoverer could lose the find to another bidder.

The government plans to introduce a system of royalties for explorers over the life of a mine to help plug the gap.

State-run Indian Rare Earths Ltd. helped the nation mine 2,800 metric tons of such ore in 2013, or 2.5 percent of the global total, according to a presentation by the company citing U.S. Geological Survey data. The USGS’s latest Mineral Commodity Summaries report doesn’t provide Indian output numbers for 2014 and 2015.

The new framework due this month should help private companies explore for minerals such as monazite, said Vaikundarajan Subramanian, director of Chennai-based miner V. V. Mineral Pvt.

The rare earths produced could in turn encourage local manufacturing of products such as optical equipment, lasers and missile-guidance systems, he said.