Mine auction rules update in works to kickstart operations fast

The Centre is preparing a fresh set of amendments to Mineral (Auction) Rules, 2015 with an aim to cut the time between auction of mines and start of production.

Intermediary timelines for activities to be completed after issue of the letter of intent till execution of mining lease will be introduced under these changes.

The proposed modifications to rules also specify the percentage of performance security to be appropriated for delay in completion of milestones.

"States will be empowered to decide if delays in mine operationalisation are because of the successful bidder. If established, the process of deducting amounts from the payment security will begin," a senior official told ET, adding the preferred bidder will recoup or top-up any appropriated performance security within two months.

If delays are due to the state government not giving clearances, the upfront payment payable will be reduced, benefiting mining companies. These rules are proposed to be retrospectively applicable on mines already awarded for milestones, which are remaining to be complied by the preferred bidder.

"Upfront payment payable shall reduce by 25% for the delay of each month in issue of the letter of intent and the preferred bidder shall pay only the remaining amount as the first instalment," the official said.

India has bid out over 450 mineral blocks since the auction regime was introduced in 2015. But less than a fourth of these are operational, largely on account of delayed approvals from state governments.

"Provisions regarding incentive for early commencement of production, expediting auction process and development of mines are proposed to be added," the official said.

Preferred bidders yet to commence production from mines are also supposed to furnish performance security within six months from the new rules coming into force.

"The letter of intent shall be invalidated leading to annulment of the entire process of auction if performance security is not furnished," the official added.