Govt removes end-use curbs for auction of mines to lure investments

By: |
June 21, 2021 5:15 AM

The decision will cover minerals like iron ore, bauxite, limestone, lead, copper and precious metals.

It also said that the states would need to intimate the centre about the outcome of any auction of mining lease within 15 days of completion of the auction and also in cases of termination and lapsing the letter of intent for a mining lease within 15 days.It also said that the states would need to intimate the centre about the outcome of any auction of mining lease within 15 days of completion of the auction and also in cases of termination and lapsing the letter of intent for a mining lease within 15 days.

The mines ministry has amended the mineral auction rules to remove end-use restrictions for mines to be allocated in future through the competitive bidding route, a move that is expected to enhance production and attract private investments into the sector.

“The state government shall not reserve any mine for captive purpose or any specific end use or partial specific end use in the auction,” the Mineral (Auction) Second Amendment Rules, 2021 that amends the Mineral (Auction) Rules, 2015, said. The first amendment to the 2015 rules was done in 2017.

The decision will cover minerals like iron ore, bauxite, limestone, lead, copper and precious metals.

The 2015 rules empowered the states to reserve a mine or mines for any particular specified end-use, but said that the minerals extracted under the mining lease shall be utilised solely for the specified end-use and not be sold or transferred or otherwise disposed of, either directly or indirectly.

In the new amendments, the mines ministry has said that in the cases of mines already auctioned as captive mines for any particular specified end-use before the commencement of the Mineral (Auction) Second Amendment Rules, 2021, up to 50% of the total mineral produced in such captive mine in a financial year may be sold in open market.

B K Bhatia, joint secretary general, FIMI, said, “The removal of the concept of captive and non-captive mines and thereby, removal of restriction on end-use of a mine is welcome. Nowhere in the world, mines are allotted on the concept of captive and non-captive.”

The removal of distinction between captive and non-captive mines and their mandatory end-use criteria is likely to augment production for sale in the open market, boosting supplies in the country. This also means that the preference to ‘captive’ users will go and, instead, all mines will be available for anyone including commercial miners, analysts said.

In the new amendments, the mines ministry has said that the state government would need to intimate the Central government the details of all the areas or mines available with it for auction of mining lease within 45 days. These include those leases entangled in legacy issues and under litigation, estimated to over 500 leases.

It also said that the states would need to intimate the centre about the outcome of any auction of mining lease within 15 days of completion of the auction and also in cases of termination and lapsing the letter of intent for a mining lease within 15 days.

The new amendments have also suggested the state to intimate to the central government the details of all the areas or mines available with it for auction of composite licence within 45 days of the commencement of the Mineral (Auction) Second Amendment Rules, 2021.

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