In order to boost mineral production in the country, the Indian government is moving ahead with an amendment of the Mineral (Auction) Rules, 2015 by offering financial incentives to successful bidders of auctioned mines to start production early.
The draft amendment notification published by the Ministry of Mines says that the “proviso” that needs to be included in the Mineral (Auction) Rules is that “the lessee (of a fully explored mineral block) shall pay only fifty per cent of the amount… for the quantity of mineral produced and dispatched earlier than the scheduled date of commencement of production as given in the tender document.”
The incentive on payment of amount quoted under rule 8 of the Mineral (Auction) Rules shall be applicable on “the quantity of mineral produced and dispatched between actual date and the scheduled date of commencement of production”.
Therefore, a successful bidder who has the vesting orders can opt to start production as early as possible to avail of the incentive. If the tender document, for example, mentions January as the month of commencement of operations, the leaseholder would like to start operations in November or December in order to secure a 50% rebate on the quoted revenue share.
A report prepared by a high level committee headed by the Vice Chairman of NITI Aayog on mines, minerals and coal sectors had recommended that providing an incentive to successful bidders for early commencement of production from the auctioned mines was necessary.
“It has been decided to provide in the Mineral (Auction) Rules, 2015 that for fully explored blocks, there would be a 50% rebate in the quoted revenue share… The incentive will encourage the lessee to operationalise the mine and start production at an early date thereby increasing mineral production”, the draft amendment notification states.
As per recommendations of the high level committee, the Ministry of Mines may also adopt the methodology for commercial auction of coal blocks with the target of quickening the pace of mining operations of auctioned leases. The objective of the amendment is to make minerals available in the market at the earliest to feed many key industries.
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