The mining industry has introduced several initiatives to enhance investments in the sector. These initiatives include the establishment of a framework for transparent and non-discretionary mineral concessions through the Mines and Minerals Development and Regulations Amendment Bill in 2021 and the notification of the Mineral (Auction) Amendment Rules in February 2022. As per the am-ended rules, GPS has been allowed for the identification and demarcation of the area where a composite licence is proposed to be granted through auction. Coal is the mainstay of energy and contributes about 70 per cent of the total power generation in the country. Launched in 2020, the auction of commercial coal mines through a revenue sharing mechanism has been receiving a good response from bidders.
Mineral auction updates
Since the new procedure for auctioning mineral blocks was introduced in 2015, a total of 241 mines have been auctioned till date. In 2022-23 (till March 7, 2023), 87 mineral auctions took place as against 46 mineral auctions in the previous year.
In Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Uttar Pradesh and Goa, 87 mineral blocks (19 limestone, 27 iron ore, five gold, 16 manganese, 10 bauxite, two graphite, three rock phosphate, three phosphorite, and two nickel, chromium and associated platinum group element) were auctioned between April 1, 2022 and March 7, 2023. Currently, 111 notice inviting tenders have been floated for different minerals – Odisha-6, Chhattisgarh-17, Karnataka-15, Jharkhand-7, Andhra Pradesh-11, Rajasthan-2, Tamil Nadu-8, Madhya Pradesh-15, Goa-5, Maharashtra-19 and Gujarat-7.
Coal auction update
The coal sector has been witnessing significant reform measures in the past few years. In order to improve efficiency and competition, the government approved coal auctions to private companies. Commercial coal mining was launched on June 18, 2020 under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957. Since its launch, the biggest ever auction of 141 coal mines took place in November 2022. These mines are spread across 11 coal/ lignite-bearing states – Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Telangana, Maharashtra, West Bengal, Andhra Pradesh, Rajasthan, Tamil Nadu and Bihar. A total of 133 coal mines have been put up for auction in the sixth round of commercial auctions, of which 71 are new coal mines while 62 coal mines are rolling over from earlier tranches of commercial auctions. In addition, eight coal mines for which single bids had been received in the first attempt have been included under the second attempt of the fifth round of commercial auctions. In the auctions held under the sixth round and the second attempt of the fifth round, a cumulative 29 coal mines were successfully auctioned as of March 9, 2023. Of the successfully auctioned 29 coal mines, 22 coal mines are fully explored and seven are partially explored. The total geographical reserves for these mines are about 8,160 million tonnes (mt). The cumulative peak rated capacity of the fully explored coal mines is 74.96 mt per annum. The auctions witnessed strong competition with a number of first-time bidders in this round. The monetised value of these mines is Rs 711.92 billion with an average revenue share of 22.12 per cent. Once operational, these mines are expected to contribute more than 7 per cent of the country’s coal requirement. It is expected that these auctions will result in a capital investment of around Rs 113 billion.
Key initiatives
In order to enhance the participation of bidders, the Ministry of Coal has brought new policy initiatives, which include a reduction in the upfront amount and bid security amount, permission to relinquish a part of the coal mine in the case of partially explored coal mines, introduction of the National Coal Index and the National Lignite Index, ease of participation with no entry barriers, full flexibility in coal utilisation, optimised payment structures, incentives for early production, coal gasification and usage of clean coal technologies.
In sum
India has a vast mining potential with significant scope for drilling and exploration activities. Going forward, the amendments complementing the mining policy reforms will facilitate the auction of more mine blocks, thereby increasing production and supply in the country