The centre has amended Mineral (Auction) Rules, 2015, introducing intermediary timelines, aiming to speed up operationalisation of bid out mines. An official statement said over 585 mines have been successfully auctioned since 2015. The amendments have introduced penalties for delayed operationalisation and incentives such as concessional duties for those who fast-track production.
“Operationalisation of the auctioned mines needs to be sped up for increasing mineral production,” the mines ministry said adding a project monitoring unit (PMU) has been set up for the same. The fresh amendment to the Mineral (Auction) Rules, 2015 is the “latest step in its endeavour to fast-track operationalisation,” the ministry said.
Prior to the amendment, the rules prescribed only a broad timeframe of three years (extendable by an additional two years) for executing the mining lease after the letter of intent (LoI) is issued. Failure to meet this milestone resulted in annulment of the block’s auction. Despite the stiff penalty, there was no mechanism to monitor progress across the various stages between the issuance of the LoI and the execution of the lease, leaving limited opportunities for mid-course corrective action.
The centre has now introduced intermediate timelines which need to be adhered since penalties prescribed for delay. “If the final milestone is achieved within the stipulated timeframe, any penalties incurred for earlier delays will be adjusted against the auction premium payable,” the statement said adding the overarching objective is to ensure timely operationalisation of the mine, rather than to impose punitive measures.
This amendment also prescribes incentives for early operationalisation of mines. The statement said the centre’s intent is to deter potential squatting by bidders.
As an incentive for early commencement of production from auctioned mining lease (ML), payable auction premium would be halved for the quantity of mineral dispatched earlier than five years from the date of issue of LoI. In case of Composite Licence (CL), concessions for early production will be applicable on the quantity of mineral dispatched earlier than seven years from the date of LoI.
ET reported in September that measures to fast-track mineral operationalisation were underway. These moves stem from the centre’s worry regarding prolonged delays in starting production at auctioned mines. According to an official analysis, less than a tenth of the auctioned mines are currently operational.
