India to give captive mining definition more flexibility

KOLKATA (miningweekly.com) – India’s Mines Ministry will put out draft amendments to the Mineral Auction Rules 2015, which will make it easier for bidders to participate in mineral block auctions and will also tweak the definition of captive mining.

According to a Ministry official, the draft amendments will be published for public discussion later this month. Input has already been sought from industry.

One of the most significant proposed changes will be the definition of captive mining as currently stated in the rules. The definition and current restrictions will remain unchanged for existing mining leases, but the government plans to incorporate a more flexible definition for new mining leases granted through auctions.

Under current rules, a captive mining leaseholder is only permitted to use the production for its own linked end-use. However, citing examples from captive thermal coal blocks, a Mines Ministry official says that in many cases, a thermal power company does not optimise production from its captive mine beyond the fuel requirement of its linked thermal power plant, resulting in suboptimal mining operations. Hence, the government aims to allow several captive mining lease holders, particularly on coal, to engage in merchant trade of the production that is excess to their requirements.

With the introduction of private enterprises in the coal mining industry earlier this year, the Mines Ministry also believes that there is little rationale to have two categories of miners in the coal sector. It was pointed out that since both categories are securing coal blocks under the same auction rules and since the price is determined through competitive bidding, both are paying for the same materials, but one category is restricted in terms of the sale of production.

Meanwhile, on the slow pace of auctions, the Mines Ministry has held a series of consultations with mineral-bearing states and has sought a report on the status of various stages of exploration of blocks that could be put up for auction in the current financial year.

Once the report is ready next month, the Mines Ministry will draw up a list of blocks and forward them to provinces to expedite their allocation through auctions.

By March this year, various provinces had auctioned 21 mineral blocks and the Mines Ministry will push the provinces to achieve a target auction of 100 blocks by March 2018, the official says.