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India’s Mines Ministry bets big on fresh mineral auctions despite moderation in valuations

13th November 2017

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – Hoping to beat the downturn in valuations through tweaks in rules, India’s Mines Ministry will complete the auction of 12 mineral blocks by the end of March 2018, and will put on the block another 60 mineral assets in the next financial year.

The government expects $8-billion from the auction of the remaining 12 blocks during the final four months of the current financial year, with bulk of the revenue accruing to provincial governments where the blocks are located.

“There is always a time of euphoria and there is always a time for realism. So realism has set in now and valuations are moderating,” Mines Secretary Arun Kumar said in a statement.

Having already auctioned 12 mineral blocks in the current financial, he said that one impact of moderations in valuation was that percentage of revenue sharing was going down.

However, the Mines Ministry is hoping to counter the ‘realism’ by changing auction rules, lowering minimum threshold eligibility criteria and ensuring higher participation from user industries and, hence, higher competition for the assets.

Sources have pointed out that even if the government is able to complete the auction of 24 mineral blocks in the current financial year, it will fall short of the target of allocating 71 blocks during 2017/18.

To ease the process of allocation of mineral assets, the rules will be tweaked to reduce the mandatory minimum number of bids received for an auction to be considered valid and lower the threshold net worth limit of bidders for a block.

As a hedge against poor participation, as per the proposed rules, provincial government will be legally empowered to go ahead with financial bidding, even if there are less than three bidders that qualified at the technical bidding stage.

The changes in auction rules are expected to be framed and ratified by the end of this month.

 

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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