India likely to miss mineral block auction target

11 sept

India’s Mines Ministry is likely to miss its goal of completing the auction of 71 non-coal mineral blocks across seven provinces in the current financial year, despite a flurry of activity to ease federal rules.

The unpreparedness of provinces to conduct auctions is largely blamed for the tardy allocation of the already identified mineral assets. The Mines Ministry, headed by Narendra Singh Tomar, on Thursday decided to convene a stock-taking meeting with all mineral bearing provinces to “understand the reasons for their going slow on auction”, a government official said.

Over the past few weeks, the Mines Ministry had initiated the process of reframing the National Mineral Policy 2008 and Mineral Auction Rules 2015. The stated objective is to ease the process of allocating mineral assets for prospective bidders, including reducing the mandatory minimum number of bids received to consider an auction valid and the lowering of the minimum threshold net worth limit for prospective bidders for mineral blocks.

However, the mining industry has pointed out that it is not the governance or legislative environment that is a deterrent to wooing investors, but rather the “ground level administrative logjam” at the provinces.

According to the Federation of Indian Mineral Industries, the representative body of the mining industry, over the past two years, only 29 of the 58 identified mineral blocks could be successfully allocated, while the rest had to be annulled, owing to problems relating to land and land acquisition administrative support at the provinces.

The new tranche of 71 mineral blocks identified for allocation in the current financial year include six blocks (two gold and four cement grade limestone) in Andhra Pradesh, 11 blocks (four bauxite and seven limestone) in Chhattisgarh, 12 blocks (three bauxite and nine limestone) in Gujarat, nine blocks (one bauxite, three limestone, one gold, one graphite, two emerald and one iron-ore) in Jharkhand, 18 blocks (four bauxite, seven limestone, one gold, one graphite, two manganese, two iron-ore and two copper) in Maharashtra, seven blocks (one limestone, one graphite and five iron-ore) in Odisha and eight blocks (seven limestone and one copper) in Rajasthan.

To de-risk the auction process against poor response, provincial governments will be legally empowered to go ahead with the bidding even with less than three technically qualified bidders.

An explanatory note circulated with the draft amendments to the Mineral Auction Rules states that the “proposed amendments will allow the provincial governments to proceed with auction if at its second attempt, the number of technically qualified bidders were less than three”.

“A good mineral block will anyways attract more than three bidders and, therefore, the provision is being amended to allow the local governments to continue with the auction process in the second round in case the number of technical qualified bidders do fall below three,” the explanatory note states.

Source-miningweekly