Goverment may relax norms to lure bidders for mine auctions
The Financial Express , Jul 12, 2017
With non-coal mining auctions having had a tepid response so far, the mines ministry may soften rules without amending the provision for auctions under the Mines and Mineral (Development and Regulation) Amendment Act, 2015.
Aimed at bringing in transparency into the process of allocation of non-coal mines, the government had amended the previous Act, but the responses are not as encouraging as only 29 mines could be allocated since then. Sources say many auctions have to be annulled initially for the lack of bidders. The contour of the proposed changes in the rules will be discussed at a meeting with the mineral-rich states like Jharkhand, Odisha and Chhattisgarh on Wednesday. A committee has also been formed in the ministry for looking into the probable changes that will make the auctions more attractive.
“Auction will always be a basic requirement because the Act will not change. However, we will try to make the rules more conducive. We would like to improve,” mines secretary Arun Kumar said.
After the Act was amended, the government had said 50 mineral blocks could be auctioned in the first year itself. However, even as more than two and half years have gone by, the allocation of 29 blocks points towards limited success of the process that was aimed at making things easier and transparent.
The MMDR is silent on a state’s role in land acquisition, which has been one of the stumbling blocks for successful mines auction. The financial health of the industry also came in the way. The Centre has advised the states to keep the concession area adequate for the proposed mining area. Market factors such as setting a reasonable reserve price are also an extremely critical factor for successful auctioning.
A KPMG-FICCI report titled Mines & Minerals Development-Way Forward said the limited success in auctioning of blocks have been driven by multiple factors including development risks, poor geological features of the blocks, higher base price and inadequate information available to determine mine characteristics.
Apart from limited number of successful auctions, the auctions have been limited to the extent of both from the perspective of minerals and the number of the auctioning states. Only five minerals, primarily iron ore and limestone, have been auctioned and only seven states took part in the process so far. The mines ministry hopes to auction around 100 mines in the current fiscal.
Kumar said to step up the exploration work, the ministry is examining the possibility of the Open Acreage Licensing Policy (OLAP), as adopted by the ministry of petroleum and natural gas for gas exploration. However, he was quick to add that the exploration of petroleum and natural gas and mining exploration are two different issues.
Mines minister Piyush Goyal said there is a need to step up mineral exploration, which is currently constrained due to lack of private sector participation. He also suggested the PPP model .