News Excerpt:

Recently, the Ministry of Mines has notified the Mineral (Auction) Amendment Rules, 2024.

Key Points:

• It will replace Mineral (Auction) Rules, 2015.
• Mineral (Auction) Amendment Rules, 2024, introduced by the Ministry of Mines, mark a significant shift in the regulatory landscape governing mineral auctions.
• These changes are meant to improve transparency, promote competition and boost state revenue from mineral auctions.
• Stakeholders in the mining sector are urged to familiarize themselves with these amendments to ensure compliance and successful participation in future mineral auctions. 

Major changes in new rule:

• The amendments introduce an upper limit of Rs 500 crore on the one-time upfront payment made by the successful bidder for a mineral block. 
• Earlier, there was no cap which led to aggressive upfront commitments. The cap provides flexibility to bidders.
• These changes, ranging from bid submission rules to upfront payments and performance security, aim to enhance transparency and fairness in the auction process.
• Bids placed by affiliates of companies who have explored a block being auctioned will be made public to ensure a level playing field for other bidders. 
• According to the Rules, a bidder shall submit only one bid in an auction of a mineral block and no affiliate of a bidder shall submit another one in the same auction.
• The new norms bar corporate affiliates from bidding for the same mineral block. The rules define an affiliate as an entity controlled by another bidder for that specific auction. Any affiliate bids made will also be publicly disclosed to ensure level playing field.  
• An affiliate has been defined as a person (or company) controlled by another bidder in the auction.
• Noteworthy limits have been imposed on upfront payments and performance security for preferred bidders and composite license holders, ensuring a balanced and competitive environment. 
• These rules also make way for granting exploration licenses (EL) by the state government. 
• EL can also be bid out by the state and centre.
• Performance security for an exploration license has been fixed at Rs 2 crore for an area more than 500 square kilometres (sq km) but less than or equal to 1000 sq km.
• The amended rules enable state governments to directly grant exploration licenses (EL) via auctions. 
• The license holder can explore mineral reserves before potential mining leases. This boosts upfront investment in comprehensive mineral exploration.
• According to rule, the State Government shall specify the maximum percentage share (known as ceiling price) of the auction premium that shall be payable by the future lessee of mining lease. 
• This amount will be paid after the prospecting operations undertaken under the exploration licence being auctioned.

Conclusion:

The Minerals (Evidence) Amendment Rules, 2024, signify a proactive approach by the Ministry of Mines in refining regulations. The focus on threshold values, expanded rule coverage, and the establishment of a committee for mineral potentiality assessment demonstrate the government’s commitment to ensuring effective and updated mineral content regulations. Stakeholders in the mining sector should familiarize themselves with these amendments to ensure compliance and leverage opportunities in this evolving regulatory landscape.