KOLKATA (miningweekly.com) - The Indian government has directed provincial governments to submit a comprehensive list of all functional and nonfunctional mines within their respective geographies to finalise mineral assets to be put up for auction for the first time.

The Mines Ministry has sought the list detailing the mineralisation of each asset, the status of environmental clearances and current operational status of each of the mines.

While no official date has been announced for the first ever auction of mineral resources, officials in the Ministry indicated that the process should commence in June 2015, as soon as provinces submitted the list and rules for auction were firmed up by the federal government.

He said that draft rules of the auctions had been circulated among various provincial governments for comments and suggestions.

It was indicated that the Ministry hoped to auction at least 200 mineral reserves in the first phase, including limestone, iron-ore and bauxite, primarily in the provinces of Odisha, Jharkhand, Madhya Pradesh, Chhattisgarh, Karnataka and Rajasthan.

However, the actual number of mineral reserves to be auctioned would largely depend on the provincial governments, as the latter might seek to reserve some assets for allocation on a preferential basis to mining entities owned and operated by them, officials said.

The recently promulgated Mines and Minerals (Development and Regulation) Act 2015 empowered the federal government to allocate mineral reserves through the auction process similar to the move already initiated in case of allocation of coal blocks.

However, Mines Minister Narendra Singh Tomar last week said that as mines and minerals fell under the purview of the provincial governments, the mandate for auctioning would have to be taken up by the latter.

While no prior approval for auctioning and subsequent allocation of mineral assets to private investors would be required by provincial governments, the responsibility for framing the auction rules and establishing the overall regulatory environment would lie with the federal government.

But even as the government, buoyed by the success of auctioning 33 coal blocks in the first two phases, was going full steam ahead in adopting the auction route for other minerals, the move had been flayed by the Federation of Indian Mineral Industries (FIMI).

“We have taken a stand that auction of mineral resources is not a sound economic proposition from the point of view of development of resources,” FIMI secretary general R K Sharma said.

“Auction for a commodity can be done only when the bidder knows what is being offered. Since exploration was highly capital intensive and it was not possible to explore the entire deposit what would be the basis for bidding. Auction will only lead the mining industry into an unviable environment,” Sharma said.