Only a third of critical mineral blocks find buyers

NEW DELHI: India's first critical mineral auction on Monday saw some lesser-known players emerging successful even as 14 out of 20 mines on sale remained unawarded due to tepid response.

The mines ministry named preferred bidders for six mines.

Kolkata-headquartered Maiki South Mining won the Katghora Lithium and Rare Earth Element (REE) block during the bid round while Odisha's Agrasen Sponge bagged two graphite and manganese blocks in the state.


New Delhi-headquartered Kundan Gold Mines won the Akharkata Graphite Block in Odisha. The Iluppakudi Graphite Block in Tamil Nadu was bagged by Dalmia Bharat Refractories while Uttar Pradesh's Pahadi Kalan-Gora Kalan Phosphorite Block was cornered by Sagar Stone Industries.

A company which offers to share the highest percentage of its revenue earned through sale of extracted minerals with the state governments - called the auction premium - wins the bid.

The value of estimated resource (VER) was calculated by the Centre and bids were based on this valuation.

400% premium
Interestingly, the winning auction premia for the six mines ranged from 13.05% to 400%. The maximum auction premium has been quoted for the Pahadi Kalan-Gora Kalan Phosphorite Block at 400%. "This means Sagar Stone Industries will be paying Rs 400 for every Rs 100 it earns from the mine," a senior official aware of the development told ET.

Responding to queries on the reason for this abnormal premium, mines secretary V L Kantha Rao said, "It is a phosphorite block and we are completely import dependent for it. There is a good demand for this mineral in the country and the resource is very high at 19 million tonnes."

According to Rao, there is a good prospect for phosphorite in the country because of which there is much competition for the mine.

Commenting on whether the block may have been undervalued to command such a high premium, he said, "We kept the royalty rates of critical minerals very attractive. There were a lot of minerals which were attracting a rate of 10-12%, most of them have been brought to 2%. I think it is important that the block should take off."

Next round
Mines minister G Kishan Reddy also launched the fourth tranche of auction during the event Monday. This included 21 blocks of critical minerals, of which 11 are fresh blocks, spanning Arunachal Pradesh, Chhattisgarh, Jharkhand, Karnataka, Rajasthan and Uttar Pradesh. An official statement said these blocks contain graphite, glauconite, phosphorite, potash, nickel, PGE, phosphate and rare earth elements (REE).

Under this tranche, 10 critical mineral blocks are being offered as a "second attempt" after they received tepid response in earlier rounds. A new scheme for announcing partial reimbursement of exploration expenses by exploration licence holders was also announced.