The mines ministry hopes to auction around 100 non-coal mines in the current fiscal which could attract bids as much as Rs. 1 lakh crore inclusive of royalty, contribution towards district mineral foundation and others.
Since the amendment of the mines and minerals (development and regulation) Act in 2015, a total of 27 mines have been successfully auctioned. These mines have cumulatively fetched Rs. 1.19 lakh crore revenues to the states. ‘Mines’ is a state subject.
The mines ministry believes that the auctioning of the 100 mines, four have already been done so far, would be possible in the current fiscal as states are more prepared now with the geological knowledge of the blocks.
It also hopes that the pace of auction will gather further momentum in the next fiscal.
Auctioning of the non-coal mines has been rather slow so far for a couple of reasons including subdued investors’ appetite. Poor geological knowledge of the blocks and market factors also came in the way.
Sensing that a small block with lower reserves may not catch the attraction of the investors, the Center has asked the states to club a couple of them, wherever possible, to make them attractive for the investors.
It has also asked states to set aside the “end-use” clause in cases where blocks did not receive bids. Since the Act does not specify the role of the states on land acquisition, states have been asked to demarcate blocks to minimize land-related issues. Floor price should also be set realistically, the Center tells the states.
The mines ministry was hoping to raise the sector’s contribution to the country’s GDP an additional 1 percentage point from around 2.5% now in the next two-three years by raising 30-40% growth in production every year.
The success of the mines auction is not just important for production growth, it is equally important for the states’ coffer.
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