Auction of Mineral Concessions

Auction-based allocation means that the right to explore or mine a mineral block is awarded through competitive bidding, rather than discretionary allotment. Under the Mines and Minerals (Development and Regulation) Act, 1957, the successful bidder must satisfy statutory conditions and obtain regulatory clearances before commencing operations.

Concessions covered by auction

The concession offered depends principally on the level of geological knowledge about the block.

• Under Section 10B, mining leases for notified minerals are granted through auction where evidence of mineral contents has been established.
• Under Section 11, minerals other than notified minerals may be offered as a mining lease or a composite licence, which combines prospecting rights with a subsequent mining lease.
• An exploration licence under Section 10BA may be auctioned for specified deep-seated and critical minerals; it authorises exploration, not mining.
• Minor-mineral concessions are regulated mainly through rules made by State governments under Section 15.

How the auction operates

The State government generally identifies and notifies the mineral block, while the Central Government prescribes the auction framework under the Mineral (Auction) Rules, 2015.

• Bidders first submit technical qualifications and an initial price offer through a transparent, generally electronic, tender process.
• Qualified bidders proceed to competitive bidding, and the bidder making the highest final price offer becomes the preferred bidder.
• For mining leases and composite licences, the bid is ordinarily expressed as a percentage of the value of minerals dispatched.
• The preferred bidder must make prescribed payments, furnish performance security, execute the required agreements and satisfy eligibility conditions before the concession is granted.

Rights, payments and safeguards

Winning an auction creates a conditional entitlement to the concession; it does not itself authorise immediate mining.

• The concessionaire must obtain environmental, forest and other applicable approvals and comply with the approved mining plan.
• The auction premium is payable in addition to royalty, contributions to the District Mineral Foundation and National Mineral Exploration Trust, and applicable taxes and fees.
• Auction-granted mining leases ordinarily run for 50 years, after which the block may be offered again according to law.
• The system seeks transparent allocation and revenue discovery, but inclusive growth also depends on rehabilitation, environmental protection and effective use of mineral-area funds.

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