Mines Ministry revises mineral auction rules to speed up mine development

The Ministry of Mines has amended the Mineral (Auction) Rules, 2015 to introduce intermediary timelines between the issuance of the letter of intent (LoI) and the execution of mining leases. The changes are aimed at reducing delays and ensuring faster operationalisation of auctioned mineral blocks.

The revised framework sets milestone-based deadlines and allows corrective measures during implementation. For mining leases (ML), the mining plan must be approved within six months, environment clearance obtained within 18 months, and lease execution completed within 12 months. For composite licences (CL), key milestones include execution of the CL within 12 months and completion of G2-level prospecting within 36 months.

Delays in meeting these timelines will invite penalties through partial appropriation of the bidder’s bank guarantee at 1% per month. However, if the lease is executed within the final deadline, penalties may be adjusted against the auction premium. To encourage early production, only 50% of the auction premium will apply to mineral dispatches made within five years for MLs and seven years for CLs from the LoI date.

The amendments also require bidders to submit performance security within 45 days of LoI issuance for both new and previously auctioned blocks. State governments must issue the LoI within 30 days of receiving the first upfront payment and performance security. Any delay will reduce the second instalment of the upfront payment by 5% per month.

These provisions apply retrospectively to earlier auctioned mineral blocks, with remaining milestones recalculated from the date of the amendment’s commencement.