KOLKATA (miningweekly.com) – Indian provincial governments’ tardy progress in setting up mandatory district mineral funds (DMFs) is likely to delay mineral auctions.

Except for Goa and Madhya Pradesh, no other provincial government has completed the process of creating and notifying DMFs in their respective mineral-bearing districts, where mineral resource blocks will be put up for auction.

The new Mines, Minerals Development and Regulation Act of 2015, promulgated earlier this year, empowers provincial governments to allocate mineral resources, including iron-ore, bauxite and limestone, through auctions according to rules and guidelines framed by the federal government.

However, the new legislation also makes it mandatory for provincial governments to create a DMF in each of the districts where mining licences are granted. Each successful bidder is legally bound to pay the equivalent of one-third of its royalty payment to the DMF, which will be used for the welfare of people affected by projects.

In a communication issued to provincial governments last week, the federal Mines Ministry sought immediate action on setting up DMFs, as deadlines for most of the provinces will soon lapse.

The eastern coastal province of Odisha has been most tardy. The local government has not yet drawn up a list of districts where mining operations could start once auctions are to be held. The local authorities, however, have set a deadline of September for completing the process of setting up the funds.

The southern province of Karnataka had identified 32 districts as mineral-bearing but had not yet issued a notification for the creation of the fund. The Rajasthan government had also missed the notification deadline of June 30.

At the same time, the federal government had issued a warning to the provincial governments against the misuse of money accruing to the DMFs. It was noted that as large amounts of money would accrue at the grassroots level, the onus was on the provincial government to strengthen the political and administrative structures of the local government at the district and village levels, and foster credible leadership, so that funds demarcated for the local people were actually spent efficiently and according to priorities set by the local people.