Indian provinces get to a slow start for mineral auctioning

KOLKATA (miningweekly.com) - Inexperienced in processes and procedures, only four Indian provinces have taken steps to get auction off non-coal mineral reserves .

The Mines Ministry has completed short-listing 70 mineral blocks, which include iron-ore, bauxite and limestone, and all geological reports of the explored blocks handed over to the provincial governments, including model auction processes, a Ministry official said.

The list of blocks to be auctioned in the first phase had been pruned to 70 down from the 90 initially planned, since geological reports of some were yet to be completed.

Only the provinces of Karnataka, Maharashtra, Gujarat and Rajasthan have issued notices inviting tenders for 27 mineral blocks, the official said, adding that most other provinces were going slow owing to inexperience of the process, shortage of trained officials and caution to avoid allegations of irregularities even though the federal government had laid down detailed models to be followed.

Significantly, some of the most mineral-rich provinces like Odisha, Chhattisgarh and  Jharkhand were yet to issue notices  for auction for the mineral blocks short-listed in their respective geographies, the official added.

As per the new Mines, Minerals Development and Regulation Act (MMDRA) 2015, the provincial governments had been mandated to adopt the auction route for allocation of all mineral resources within their respective territories, except coal, as per rules and guidelines laid down the by federal government.

However, provinces like Odisha were not rushing through with the auctions and were preferring to adopt a wait and watch policy and let other provinces take a lead and therein proceed following the experience of other provinces, the official said.

Even provinces like Maharashtra, which had announced auctions, decided not to put up all the blocks at once, but instead auction four mineral blocks of the total nine short-listed within the province by the Mines Ministry.

At the same time, Ministry officials conceded that some of the provinces were hesitant to rushing through the auction process, unsure of the valuations it would fetch given the downturn in metal and mineral sector, particularly in case of iron ore where local steel mills were finding imports of raw material more viable than invest in own raw material sources.

As per the federal law laid down for the provinces, prospective investors would have to submit a quotation as a percentage of the value of mineral that could be dispatched from a specific mine per month and the highest quote would be considered as the base price for auctioning in the second round to decided the winning bid.

However, Mines Ministry officials exuded confidence that auction of all the 70 blocks would be completed by the provinces before the close of current fiscal on March 31, 2016