Mineral (Auction) Amendment Rules, 2024

The Indian Government has amended the mineral auction rules through a notification of the Mineral (Auction) Amendment Rules, 2024. The changes aim to improve transparency, promote competition and boost state revenue from mineral auctions.

Capping upfront fees

The amendments introduce an upper limit of Rs 500 crore on the one-time upfront payment made by the successful bidder for a mineral block. Earlier, there was no cap which led to aggressive upfront commitments. The cap provides flexibility to bidders.

Restricting affiliate bidding

To minimize anti-competitive practices, the new norms bar corporate affiliates from bidding for the same mineral block. The rules define an affiliate as an entity controlled by another bidder for that specific auction. Any affiliate bids made will also be publicly disclosed to ensure level playing field.

Facilitating exploration licensing

The amended rules enable state governments to directly grant exploration licenses (EL) via auctions. The license holder can explore mineral reserves before potential mining leases. This boosts upfront investment in comprehensive mineral exploration.

Standardizing EL safeguards

The revisions set a uniform performance security deposit of ₹2 crore for exploration permits spanning 500-1000 square kilometers. This standardization provides clarity to potential EL bidders regarding financial commitments beforehand.

Empowering states on revenue sharing

State governments will now define the maximum percentage share of auction premiums payable to them once commercial mining begins under the exploration license. This enhances states’ rights over revenue sharing from eventual mineral production after preliminary exploration.

Attracting investment interest

By reducing upfront payment burdens and enhancing exploration policy certainty, the auction rule changes aim to attract greater private participation. Competitive efficiency through restrictions on affiliate bidding should also enable level playing field for investors.

Bolstering transparency

The latest amendments are in line with India’s mineral sector policy orientation towards transparent and competitive mechanisms for subsoil resource allocation. Publicly disclosing affiliate bids reinforces transparency objectives.

Implementation key

The policy provisions updating India’s mineral auction framework incorporate long-standing regulatory reform demands. Their on-ground implementation will now need monitored, especially decentralization of exploration permitting and states’ revenue share decisions.


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