Mineral-rich states have pitched for relaxing the existing mineral concession rules for non-coal mines, including a tweaking of the present end-use policy to allow the lease owner sell the non-usable raw material from the allocated mine in the open market. These states have also asked for relaxing the criteria of no-less-than-three-bidders if the mine does not get bidders in the first attempt, to make the auction process more successful.
States also pitched for bringing a change in the current method of arriving at the value of mineral resource in a block in their first meeting, convened by the Centre, on how to make the mineral concession rules conducive for the miners in the wake of poor response from the auction so far.
The Mines and Mineral (Development and Regulation) Amendment Act, 2015, which makes auctions of such mines mandatory for allocations, empowers the Centre to prescribe the terms and conditions for grant of mineral concessions and to reserve mines for specific end-users at its discretion.
The quality of the mined material may not be uniform in most of the cases while mining and hence, the miner do not find them usable in his captive unit though the redundant material has market value. States are of the view that such miners should be allowed to sell them in the market, sources present in the meeting told FE.
Auctioning of non-coal mines auction since its journey in 2015 has been rather slow. Till date, 74 mineral blocks have been offered for auction, but only 29 mines could be successfully auctioned for the lack of bidders. This prompted the mines ministry to look into changing the contour of the present mineral concession rules.
It has also formed a committee in the ministry for looking into the probable changes that will make the auctions more attractive.
Under the present rules, the auction process will be cancelled and fresh tendering and auctioning will take place if less than three bidders participate. States want relaxing the criteria at least in the subsequent bidding stages. Sources said the mines ministry may consider the idea.
Apart from limited number of successful auctions, the auctions have been limited to the extent of both from the perspective of minerals and the number of the auctioning states. Only five minerals, primarily iron ore and limestone, have been auctioned so far and only seven states took part in the process so far.
Currently for auctioning mineral blocks, entire quantity of mineral available is taken into consideration for arriving at the value of mineral resource. States suggested that the non-mineable area should not be a part of the value of mineral resources, but the value of mineral resources should only consider mineable quantity.
A KPMG-FICCI report titled, “Mines & Minerals Development-Way Forward”, said that the limited success in auctioning of blocks have been driven by multiple factors including development risks, poor geological features of the blocks, higher base price and inadequate information available to determine mine characteristics. (ends)