The Ministry of Mines has initiated an auction for two offshore mineral blocks in the Andaman Sea, targeting deposits of cobalt, nickel, and copper. This push aims to secure raw materials for the EV and renewable energy sectors. Investors should monitor the high technical risks of deep-sea mining and the government's recent rule changes designed to improve bidder participation after previous attempts failed.
The Indian government has officially invited bids for two offshore mineral blocks in the Andaman Sea, identified as Sewell Rise-01 and West Sewell Ridge-01. Spanning over 1,632 square kilometers, these blocks contain polymetallic nodules and crusts rich in cobalt, nickel, manganese, and copper. The auction process offers 'composite licenses,' which grant the successful bidder rights for both initial prospecting and long-term mining operations.
This initiative is part of a broader strategy to boost domestic mineral security. These specific minerals are essential components for the electric vehicle supply chain, renewable energy storage systems, and advanced consumer electronics. By attempting to develop these deep-sea assets, the government aims to reduce the country’s heavy dependence on imported raw materials for critical technologies.
To encourage higher participation, the Ministry of Mines recently amended the Offshore Areas Mineral (Auction) Rules on September 24, 2026. The government reduced the minimum requirement for technically qualified bidders from three to two. This regulatory shift is a direct response to a failed auction attempt in 2024, where 13 offshore blocks across the Arabian and Andaman Seas were withdrawn due to a lack of market interest. The new, smaller auction size and relaxed entry rules suggest the government is taking a more targeted approach to test the viability of these projects.
Investors should consider the significant challenges associated with this sector. Deep-sea mining involves extreme operational difficulty, requiring highly specialized and expensive equipment to operate in deep maritime environments. Furthermore, companies involved will face strict environmental and safety regulations. Because these are frontier zones, there is a high degree of uncertainty regarding the actual quality and quantity of minerals present, which translates into significant financial risk for any private participant.
Unlike traditional mining, which has established infrastructure, deep-sea extraction is capital-intensive and has long gestation periods before any revenue can be generated. The past failure to find takers for offshore blocks highlights that the industry is still cautious about the economic feasibility of such projects.
Moving forward, the primary monitorables for investors will be the response to this current auction round, the technical capabilities of the companies that express interest, and any further government support provided to de-risk these early-stage exploration activities. The success of this move will depend on whether private players believe the long-term strategic value of these minerals outweighs the high costs and operational risks involved.