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There will be two types of licence/lease – Mining Lease and a Composite License – that will be electronically auctioned under the Mines and Minerals (Development and Regulation) Amendment, Act 2015. This is as per the Mineral (Auction) Rules, 2015 notified by the Centre.
While the mining lease will be for areas with proven reserve of minerals, the composite licence (prospective-cum-mining) will be for areas where preliminary exploration has been done by the government but further exploration is required by mining companies.
Also, for auctioning mining leases, State governments will be required to specify the reserve price, which will be the mineral despatched in a month multiplied by its sale price, as published in the Indian Bureau of Mines for the month of despatch.
The rules make it clear that auctioning will be done on a forward auction basis where the highest bid above the reserve price wins.
Similar to the e-auction of coal blocks, there will be a two-stage bidding process, where bidders will have to give an initial price offer at the technical stage. The initial price offer will have to be higher than the reserve price.
The highest such initial price offer will be the floor price (starting price) for the e-auction in the financial bid stage.
According to the rules, auctioning for composite licence will follow a similar pattern, but with additional requirements. Here, State governments will be required to share the findings of the preliminary exploration of an area, the details of the land, including that under forest, and not owned by the State government.
The winner will have to undertake exploration in the area. If the winner fails to find mineral content, the licence will lapse and the mining lease shall be cancelled.
To be eligible for participation in the auction of either of the licence/lease, the mineral reserve should not exceed more than 1.25 times the requirement of the bidder for its specified end-use over 50 years. Also, bidders will need to furnish performance bank guarantees, which will be linked to the milestones in the mining plan.
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