Draft Mineral (Auction) Second Amendment Rules, 2023 Released

The Ministry of Mines has released the draft of amendment rules for the implementation of provisions for exploration license (Section 10BA of the Mines and Minerals (Development & Regulation) Amendment Act, 2023 introduced in August 2023) and related matters. Prior to this, in September, the Mineral Auction Rules, 2015 was amended to prescribe the procedure for auction of mining leases and composite license by the Central Government in respect of critical and strategic mines.

The following rules are proposed to be amended:

  1. The Mineral (Auction) Rules, 2015
  2. The Minerals (Other than Atomic and Hydrocarbons Energy Minerals) Consession Rules, 2016.
  3. The Mineral Conservation and Development (Second Amendment) Rules, 2023
  4. Minerals (Evidence of Minerals Contents) Rules, 2015

The amendments provide for the constitution of a committee for the identification and recommendation of blocks for auction for grant of exploration license. Guidelines are also provided for making the recommendations. In addition, eligibility criterias, procedures, bidding process etc. with respect to the auction of exploration license is also provided.

Key changes include the acceptance of a single technical bidder in case of second auction aimed at streamlining the process when participation is limited. The amendments also prohibit affiliate associated with a bidder from submitting bids in the same auction. In addition, ceiling price i.e. the percentage of revenue to be shared with the government has to be defined by the State Governments. However, it shall not be less than 25%. The proposed amendments also allow the dispatch of materials, such as overburden, waste rock, and minerals below a certain threshold value that cannot be used as a major mineral, in the normal course of mining, potentially enabling the government to generate revenue.

To combat the challenge of inadequate expertise among existing players in mining deeply embedded minerals, the government had recently allowed private sector to take part in risky exploration ventures.