Auction Update: Easing the grant of mineral blocks

Easing the grant of mineral blocks

The Mines and Minerals Development and Regulations Amendment Bill, 2021, whi­ch came into effect on March 22, 2021, established a framework of transparent and nondiscretionary mineral concessions. All ma­jor mineral concessions are now given through auction. In addition, the e-auction procedure for mineral block grants has laid the groundwork for improving the ease of doing business in the country’s mining sector.

Mineral auction highlights

In Karnataka, Madhya Pradesh, Maharashtra and Rajasthan, 14 mineral blocks (seven limestone, two iron ore, two manganese, one bauxite, one rock phosphate and one kyanite) were successfully auctioned in January 2022, and 49 notices inviting tenders (NITs) were issued for Madhya Pradesh, Uttar Pradesh, Jharkh­a­nd, Maharashtra and Chhattisgarh. In addition, on January 18, 2022, January 21, 2022, and January 24, 2022, three auction review meetings with the state governments of Chhattis­garh, Rajasthan and Maharashtra, respectively, were conducted. Two limestone blocks were auctioned in Karnataka, and 15 NITs were issued for Odisha and Karnataka in December 2021. In October 2021, four blocks were auctioned across Odisha (one), Chhattisgarh (two) and Andhra Pradesh (one). On October 11, 2021, NITs were issued for three limestone, one graphite, one iron ore, one kyanite and silli­manite, one bauxite, two manganese ore, one copper, and one copper and gold blocks in Ma­ha­rashtra. On October 13, 2021, a meeting with the Tamil Nadu government was conducted to monitor the local auction’s progress.

During the Mines and Minerals Conclave, a technical session with panel discussions was also conducted to present and discuss new amendments to mining laws, aimed at making the process of auctioning mineral blocks as well as mineral exploration easier. With the ac­ti­ve cooperation of the state governments, more than 145 mineral blocks have been successfully auctioned in the country since 2015-16, with 37 auctioned in 2021-22 alone. Since the establishment of the National Mineral Ex­plo­ration Trust (NMET), the European Commis­sion has approved 204 projects for NMET funding, including 185 for mineral exploration, 18 for baseline geosciences data generation, and one for the National Geoscience Data Repo­sitory. So far, 116 of the 185 exploration projects undertaken by notified exploration agencies have been completed. Five of these blocks have been auctioned: two limestone blocks, one each from Madhya Pradesh and Chhattis­garh; and three iron blocks from Odisha.

Coal auction update

In the first ever tranche of commercial auctions, launched on June 18, 2020, the Ministry of Coal completed the auction process for 38 coal mines for commercial mining under the Coal Mines (Special Provision) Act, 2015 and the MMDR Act, 1957. Out of the 38 mines put on auction, 20 were successfully auctioned – a success rate of 53 per cent. Several requests have been received from various state governments for the allotment of coal blocks to their PSUs for extraction of coal. For the subsequent rounds of auction for commercial mining, such as the second tranche, a total of 67 coal mines are being offered, of which 37 are fully explored and 30 are partially explored blocks. The mines on offer are geographically spread over the coal-bearing states. To cater to the demand of coking coal consumers, six coking coal mines have also been put on offer.

Government initiatives to incentivise auction of minerals

The following provisions have been implemented for state governments to incentivise them to auction mining blocks: for the financial year 2021-22, a sum of Rs 2 million will be released to each state where mineral blocks are available for auction, with a Rs 2 million incentive for each successful mineral block auction. Fifty per cent of the amount is to be paid to the transaction advisor, up to a maximum of Rs 0.5 million for each block that is put up for auction but cannot be successfully auctioned. At commencement, Rs 17 million has been paid to five states (Andhra Pradesh, Chhattisgarh, Gujarat, Madhya Pradesh and Odisha), where 17 mineral blocks were auctioned. Further payment will be released after receiving the updated information regarding auction of the mineral blocks. The latest amendment will complement recent mining policy improvements by facilitating the auction of more blocks, hence boosting production and mineral supply in the country.

In sum

Amendments to the policy have also enabled people to propose suitable blocks for auction for a composite licence in areas where the mineral potentiality of the blocks has been identified based on the available geoscience data. The latest amendment compliments the mining policy reforms taken in the mineral sector and facilitates auction of more blocks, thereby increasing production and mineral supply in India.