India’s ministry of mines has amended the Mineral (Auction) Rules, 2015 to introduce intermediary timelines for various post-auction activities to ensure faster operationalisation of auctioned mineral blocks, according to a government statement on Wednesday, October 21.
The amendment sets clear milestones between the issuance of the Letter of Intent (LoI) and the execution of mining leases, with penalties for delays and incentives for early production. The move aims to improve monitoring across the stages of mine development and to prevent bidders from holding on to blocks without starting operations, the statement said.
Under the amended rules, mining lease (ML) holders must complete approval of the mining plan within six months, obtain environmental clearance within 18 months, and execute the lease within 12 months thereafter. For composite licence (CL) auctions, two additional milestones, including execution of the CL within 12 months and completion of at least G2-level prospecting within 36 months, have been prescribed.
Delays in meeting these timelines will attract penalties through partial appropriation of the bidder’s bank guarantee, up to one percent for each month of delay, while early completion will be incentivised. If production starts within five years of LoI issuance in the case of MLs, or within seven years for CLs, only 50 percent of the auction premium will be payable on the mineral dispatched earlier, the government said.
The rules also require bidders to submit performance security before issuance of LoI, within 45 days along with the first instalment of the upfront payment. This marks a change from the earlier provision, where performance security was submitted just before the grant of the mining lease, typically three to five years after the LoI was issued.
For blocks already auctioned, the new intermediary timelines will also apply. Preferred bidders must furnish performance security within six months of the commencement of the amended rules, and subsequent milestones will be counted from that date.
The amended rules further mandate that the preferred bidder be declared immediately upon conclusion of the online auction and that the result be made publicly visible. If a state government delays the issuance of an LoI beyond 30 days (earlier 15 days), the next instalment of the upfront payment due to the state will be reduced by five percent for each month of delay.