KOLKATA (miningweekly.com) – India is falling behind in auctioning non-coal mineral blocks to private miners.
According to government data, since the Mines and Minerals (Development and Regulation) Amendment Act (MMDRA) was promulgated in 2015, provincial governments have been able to auction only 29 mineral blocks against the “unofficial” target of allocating 50 assets in the first year of the new rules coming into play.
In fact, officials pointed out that in several mineral-rich provinces, auctions were forced to be cancelled either owing to poor valuations of bids submitted, or in some cases private investors did not participate in the auctions.
The response has been so weak that the Mines Ministry has started to identify areas where rules and regulations can be made more attractive to prospective investors without having to make fresh amendments to the MMDRA through a Parliamentary process.
“Auctions will remain the basic process of allocating mineral assets. However, we would like to make the rules more conducive. We would like to improve,” Mines Secretary Arun Kumar said on Tuesday, while addressing a meeting.
While no details on the proposed easing of rules have been made available, some ideas are already doing the rounds and are expected to come up before a special committee appointed by the Mines Ministry to look into options of re-working existing regulations.
One of the proposals under consideration is to adopt the Open Acreage Licensing Policy (OALP). This newly implemented policy deals with the allocation of oil and natural gas assets to private explorers and producers through the auction route. Under the OALP, any prospective bidder is free to choose any of the potential oil and gas fields and put in bids, although the government has reserved the right to invite counter bids from rival companies before awarding the field.
The extension of the OALP in the mineral mining sector will offer two-fold benefits to private miners. Firstly, any private investor-explorers will have the option to choose a block based on its own assessment of geological data provided by the government and will not be restricted by what is made available by provincial governments.
Secondly, private investor-explorers will not have to wait for provincial governments to start the auction process, In fact, the provincial governments will have to start inviting counter bids the moment a bid for a mineral block from a private investor is received.
However, Kumar acknowledged, “exploration of oil and gas and minerals are two separate issues.”
The Ministry is also looking at fresh sops to woo junior miners into exploration of Indian mineral blocks. Unofficially, it has been acknowledged in government circles that despite opening up of the Indian mining sector through the MMDRA, interest from international mining majors has remained tepid with none of the latter showing signs of participating in domestic mining projects through the foreign direct investment route.
Under such circumstances, the Ministry committee will also look into options of developing a standard model for public-private projects wherein international junior miners could enter into agreement with Indian companies for project implementation through special purpose vehicles.