Date | Oct 30, 2017:

Given the lukewarm response to the auction of non-coal mines, the government is set to make the terms more attractive for investors. The minimum net worth threshold for bidders will be reduced to 2% of the estimated reserves for mines with mineral value of Rs 500 crore and above from 4% at present and miners will be allowed to sell at least 10% of unusable produce in the open market even in case of assets linked to specified captive end-uses. According to official sources, state governments may soon have the freedom to carry on with the auction process even if there are less than three eligible bidders from the second round. Currently, the auction process is halted if the number of bidders comes down to less than three up to the third round. Since the amendment to the MMDR Act, carried out in 2015, paved the way for mandatory auctioning of non-coal mines, only 29 such mines have been successfully auctioned, while bidding for 45 blocks had to be cancelled after the process was initiated. The Act empowers the Centre to prescribe the terms and conditions for grant of mineral concessions.

“With no takers for most mines, changes in the rules have become imperative. The sooner these changes are done, the better,” said an industry source who does not want to be quoted. Sources from the mines ministry said the new rules will become effective in November. The changed rules will help speed up the auction process, they added. Once the rules are revised, miners will be able to sell at least 10% of the end-use-restricted minerals every year, the sources said, adding, the limit might even be raised to a higher level. The firms can also accumulate the reserves till the fifth year and sell the the unusable produce in the sixth year subject to the cap.

The mines ministry had circulated draft Mineral (Auction) (Amendment) Rules, 2017 earlier. The revised rules are now being finalised. Apart from the limited number of successful auctions, the auctions have been limited from the perspective of minerals and the number of the states that have started auctions. Only five minerals, primarily iron ore and limestone, have been auctioned so far and only seven states took part in the process.

(Source: http://www.financialexpress.com/)