Having amended the law in March to free up new mineral areas and speed up their auction, India’s mines ministry is now tweaking the rules.
The last date for comments on the draft Minerals (Evidence of Mineral Contents) and Amendment Rules 2021 and Mineral (Auction) Second Amendment Rules was 14th May, 2021. Here are the key points:
- No block shall be reserved for captive use except for coal, lignite or atomic mineral block.
- Blocks already auctioned as captive will only have to use half of what they produce in a financial year and will be able to sell the other half in the open market. Part of this sale will attract an additional levy. The 50% can be revised later but already provides captive miners some advantage.
- If a lease deed hasn’t been executed within a year of the letter of intent, the LOI shall be invalidated leading to annulment of the entire process of auction. The state government may allow another year for execution of the Prospective Licence Deed.
- Bid security will now be 0.25% of the value of resource or Rs 200 crore, whichever is lower. The first installment of 10% of the upfront payment is to be made in 15 days of declaration of the preferred bidder. The state may give it 15 more days. On failing to make payment, the preferred bidder loses his security deposit and the next highest quote will be offered the mine.
- An amount equal to 1 % (as against the 0.5% earlier) of the value of estimated resources will be due as upfront payment, payable to the State Government in 3 installments of 20 %, 20% and 60 %. (This was 10 –10- 80)
- In cases where the average sale price published by IBM – which forms the basis for calculation of royalty and premium – is unavailable, the last available published price will be deemed to be the average sale price. If IBM has no such benchmark for the state for the preceding 12 months, then the all-India average for the mineral and its grade will be considered as the basis for royalty calculations.
- The Centre has also clarified a contentious point that cropped up the last time, the matter of the last day of a deadline being a Saturday, Sunday or any day declared a holiday by state or Centre. In such a case the last day will be the next working day.
- A key deviation from the past is the Centre’s decision to step in and auction areas where the state doesn’t. States are required to provide geological data of all mineral-bearing areas/mines and have to intimate the centre, within a month, on receiving any geological report along with a tentative auction schedule for the area. It will also have to tell the Centre of the outcome within 7 days of an auction, and also inform it of any lapsing or termination of a lease.
- Adjusting for India’s inadequate exploration data, the Government is lowering its benchmarks. Instead of G2 level exploration data (G4 being the lowest and G1 the highest), preliminary exploration (G3: quantity grade estimated with low level of confidence) will make the cut for auctions.
- For composite licences, that is exploration and mining, where it is unlikely to have any significant information it is allowing for an “estimation” of resources based on nearby mines, or “similar geological features” of nearby explored deposits. Apart from UNFC classifications, it will henceforth allow CRIRSCO (Committee for Mineral Reserves International Reporting Standards) and JORC, the Australasian Code for Reporting of Exploration Results.
- The latest notice shares standard templates for Geological Study Reports which are to be part of pre-feasibility/ feasibility reports. The government expects individuals involved in the process to be credited and to vouch for the accuracy and authenticity of the info, but final responsibility will lie with the report’s lead expert.
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