The Mines and Mineral Development
and Regulation Act, 1957 was amended in 2015. Subsequent to the amendment, the
Ministry of Mines notified the Mineral Auction Rules, 2015 on 20/05/2015 to
prescribe the procedure of the auction process.
Auction of concessions for major minerals
(other than coal, petroleum and natural gas) was done for the first time in the
history of mineral administration in the country. 33 blocks were successfully
allocated. The value of minerals auctioned out is Rs. 169,000 Crore. Revenue to
states over lease period are estimated at Rs. 128,000 Crore. The additional
revenue on account of auction process is Rs. 99,000 Crore. However, 60 auction
attempts failed during this period.
The Ministry of Mines was
monitoring the process very closely with the state governments. The consensus
emerged that the Mineral Auction Rules need to be amended to make the process more
pragmatic without sacrificing the checks on successful bidders. The Mineral
Auction Rules have been amended on 30/11/2017.
Changes and Their Impact:
1. Under the old rules the process
of auction was annulled if there are less than 3 bidders and this process used
to be carried out for 3 rounds at least. Only in the 4th round flexibility
was allowed. Each round of auction carries on for 3 months at least and this
resulted in many blocks getting annulled time and again. While a minimum of 3
bidders is still stipulated in first attempt to auction, in the amended rules
now the states have the flexibility of allocating the block in the 2nd
round itself even if there are less than 3 bidders. This will make the auction
process less cumbersome and will help states auction mineral blocks quickly.
2. Earlier the state used to
prescribe end use conditions on miners and it was very rigid. This resulted in
inefficient mining as many mines with low grade ore dumps were saddled with
this burden as they could neither use it for captive purpose nor could dispose
it of. In the amended rules, such miners will be able to dispose of 25% of such
dumps, which are not used for captive purposes. This will help progress towards
zero waste mining and utilization of minerals even in low-grade ore. This
provision holds good only for the mines that would be granted through auction
after 30/11/2017 i.e. the date of publication of the amendment rules. Bid
values are likely to improve and participation will improve further.
3. The amended rules have also
provided adjustment of the upfront premium to be adjusted against the due
payments of miner at the earliest. This would increase the liquidity of the
mining entities at the most stressed time i.e. when production begins. This
will further ease their capacity to carry out the business.
4. A major amendment in the rules
has been that the requirement of net worth for the prospective bidders. In
practical terms for an average annual production of up to Rs. 2 Crore, the net
worth required was Rs. 4 Crore, which is reduced to Rs.0.5 Crore. For an
average annual production up to Rs. 20 Crore the net worth required was Rs. 40
Crore which has been reduced to Rs. 10 Crore.
5. For small bidders the value of
unencumbered immovable property can also be taken in net worth, thus allowing
larger participation.
6. Provisions have been made to
discourage squatting on bid out leases.
Expectation from the changed
Rules:
In sum, these changes in Auction
rules will lead to enhanced participation in the auction process. Further, it
is expected that this will also give a fillip to the auction process and will
result in more mineral blocks being auctioned successfully. It is expected that
by March 2018, 34 blocks will be put through the process of auction. We expect
additional revenue over lease periods to be Rs. 75,000 Crore during the balance
period of the current year. It is expected that bigger effect of these changes
will be felt in the year 2018-19, as some of the auctions may spill over from
the current year 2017-18. Given below are the blocks in pipeline for the year
2017-18, which will be put to auction after amendment of Auction rules.
Details of Mineral Blocks in
pipeline
|
State
|
Blocks in pipeline as confirmed
by states
|
|
Chhattisgarh
|
3 blocks (2 Limestone, 1
Bauxite)
|
|
Gujarat
|
3 Limestone
|
|
Maharashtra
|
15 blocks (7 Bauxite, 3
Limestone, 2 Copper, 2 Manganese, 1 Iron Ore)
|
|
Odisha
|
5 Blocks (4 Iron Ore, 1
Limestone)
|
|
Rajasthan
|
5 Limestone Blocks
|
|
Telangana
|
3 Limestone Blocks
|
|
TOTAL
|
34
|
|
MINERAL PRODUCTION
DATA (value
in Rs crore)
|
|
Minerals
|
Cumulative
Production
|
Growth % in value
|
|
2016-17
|
2015-16
|
|
Value
|
value
|
|
All Minerals *
|
47,088.395
|
40,162.547
|
17.24%
|
|
Bauxite
|
1,413.222
|
1,409.508
|
0.26%
|
|
Chromite
|
3,643.436
|
2,304.753
|
58.08%
|
|
Copper Conc.
|
640.089
|
625.986
|
2.25%
|
|
Iron Ore
|
25,124.401
|
22,115.822
|
13.60%
|
|
Lead Conc.
|
966.917
|
788.517
|
22.62%
|
|
Manganese Ore
|
1,616.890
|
886.493
|
82.39%
|
|
Zinc Conc.
|
4,338.561
|
3,494.311
|
24.16%
|
|
Other met. Minerals
|
2,017.138
|
1,843.520
|
9.42%
|
|
Total Metallic Minerals *
|
39,760.653
|
33,468.910
|
18.80%
|
|
Limestone
|
6,681.298
|
6,052.966
|
10.38%
|
|
magnesite
|
73.566
|
70.093
|
4.95%
|
|
Phosphorite
|
311.054
|
327.525
|
-5.03%
|
|
wollastonite
|
15.894
|
15.036
|
5.70%
|
|
Sillimanite
|
53.372
|
49.899
|
6.96%
|
|
Other non Metallic
|
192.559
|
178.117
|
8.11%
|
|
Total Non- Metallic minerals *
|
7,327.742
|
6,693.636
|
9.47%
|
|
|
|
|
|
Source: IBM vide Ref: No. 231/9/Cabinet Summary/MMS/2017-18
dated 02.05.2017
|
|
|
Figures have been estimated wherever required : * indicative
and excludes precious stones and metals, hydro-carbons and atomic minerals.
|
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