In a bid to fast-track mineral extraction, the Centre will conduct auction of mines bearing minerals such as iron ore, bauxite and limestone on behalf of States for the first phase starting November this year.
In phase-I, the 12 mineral-producing states have identified 80-90 blocks that will go under the hammer by November. This was made possible after the Mines and Minerals (Development and Regulation) Amendment Act, 2015, was passed in March this year, which stipulates auction as the only means to allow extraction of iron ore and other minerals.
“The Centre in consultation with the states has decided to hand-hold the mineral-bearing states to conduct the mines auction, latest by November this year for 80-90 mines. This will be phase-I. The Centre will auction the blocks on behalf of the States,” Mines Secretary Balvinder Kumar told PTI.
ADVERTISEMENT
Of the mineral-bearing states, only Maharashtra, Chhattisgarh and Rajasthan will conduct their own auctions as they have moved ahead with their respective auction processes, he added.
“The Centre’s three agencies — MECON, MECL and MSTC — will aid the Centre in the auction process. MECON will be the transaction advisor and will conduct location survey, differential GPS study as well as do the documentation,” Mr. Kumar said.
The government’s mineral exploration arm, Mineral Exploration Corporation Ltd. (MECL), will prepare survey reports for the mines to be auctioned, and the metal scrap trading PSU MSTC will ready the auction platform, he added.
ADVERTISEMENT
“The government wants to start the auctions by November and allot the mines in a transparent process on behalf of the States. We will do the hand-holding for the States, this will make possible all auctions at a single platform, making it easier for prospective buyers,” Mr. Kumar noted.
The Centre can pay the agencies conducting the auction on behalf of the states, which can be paid back later, he explained.
“This arrangement is only for phase-I. No decision has been made for phase-II, where states have identified around 96 blocks, which will be taken up once phase I gets over. In many cases, these 96 blocks need to have G1 and G2 level of exploration reports and most of them are in G3 and G4 level,” Mr. Kumar added.
For the States that will conduct their own auctions, the Mines Ministry has advised engaging SBI Capital, a wholly-owned subsidiary of public lender State Bank of India, as a transaction advisor, Mr. Kumar said. It also suggested to consider MSTC, which provides the platform for coal auctions.
The move comes at a time when the metal industry is going through a rough patch, with the global economic sentiment continuously going north and metal prices facing intense pressure on account of high production and subdued demand.
Experts are of the view that auction of the mines overseen by a single agency (the Union Mines Ministry) will help weed out confusion.
If the auctions are conducted from a single place, there will be less channels for communication and the coordination will be better. This will help fast-track the process, helping companies make better decisions based on the current domestic and international market situation, they added.
Till date, 178 blocks have been identified by the states for the auctions — either in phase-I or phase-II.
The Mines Ministry has identified 199 such mines that can be allocated through the auction route. They are located in mineral-rich States such as Rajasthan, Jharkhand, Madhya Pradesh, Chhattisgarh, Karnataka and Odisha.