Mineral (Auction) Rules, 2015

The central government released final rules for mineral auction, which for the first time gives states the freedom to earmark a certain percentage of mines for end use and auction them. The Mines and Minerals (Development and Regulation) Amendment Act, 2015 has introduced the concept of auctioning iron ore, bauxite, limestone, manganese and other minerals, putting an end to an almost 60-year-old system of allocating mining lease on a ‘first-come-first-serve’ basis. As per the rules, a company can bid for a mining lease, as well as a composite licence or mining-cum-prospecting lease. The company bidding for a mining licence has to have a specified end-use plant and soon after acquiring the lease, it has to start operations at the unit. According to the rules, the mineral extracted after obtaining mining lease should be utilised solely for specified end-use and cannot be sold, transferred or disposed of, either directly or indirectly. While the rule allows bauxite to be used by alumina plants, iron ore by integrated steel plants, limestone by cement units, the government has barred states from specifying any end use for manganese. The government would also auction composite licence, where the entity has to first complete prospecting operations and later sign a Mine Development and Production Agreement with the state government to obtain mining licence.