The Government is all set to begin the much anticipated competitive bidding of 99 mining leases through the e-auction route and according to sources privy to the development, the process is likely to start by August this year.
The auction will be conducted by the state governments and significantly they will have the power to reserve any number of mines for a particular end use. In other words, the states can decide that a set of mines can only be used for a specific sector. Initially the Union Mines had released a list of 199 mines across the country, whose leases were to be auctioned, however according to highly placed sources, as of now only 99 mines are in a position to be offered for bidding.
Technically speaking, their actual volume has been determined, whereas in case of other mines, their geological exploration is still being conducted. Therefore, the actual auction process is not likely to begin before three months, though the Centre was keen to start it by this month.
Under the provisions of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 -- which the Centre got cleared in Parliament during the recently concluded Budget session - the states have been vested with the powers of conducting the auction and they have the authority for reserving a particular set of mines for a specific end use. Therefore, if such mines are auctioned, they will be used solely for the specified end use and also they cannot be sold or transferred or disposed off either directly or indirectly by the successful bidder.
According to the initial list of 199 mines that were to be originally offered for auction, 142 were situated in Gujarat and 168 of these were limestone mines. The remaining mines consisted of iron ore, manganese and bauxite, which are the major notified minerals. Of these, only 99 mines are to be offered for auction, as their volumes are known.
The Union Mines Ministry has notified the auction rules, a copy of which is available with The Pioneer. According to these, the auction is to be conducted only through an online electronic auction platform by the states. The reserve price for bidding will be the minimum percentage of the value of mineral dispatched in a month.
Also the state governments while issuing the tender notice for the auction process, will have to mention in detail the estimated mineral content available in the mines on offer.
The successful bidders will have to make an upfront payment upon getting the mining lease. The upfront payment will be an amount equal to 0.50 per cent of the total value of the estimated resources (present in the mine).
In addition to this, the successful bidders shall also have to submit a performance security of an amount of 0.50 per cent of the value of estimated resources and the performance security will be adjusted every five years so that it continues to correspond to 0.50 per cent of the re-assessed value of estimated resources.