The Ministry of Mines has introduced amendments to the Mineral (Auction) Rules, 2015, aimed at fast-tracking the operationalisation of auctioned mineral blocks. The reforms, effective October 17, 2025, establish clear milestones, time-bound incentives, and penalties to encourage timely production and discourage delays by successful bidders.
Clear Milestones for Mining Projects
The amended rules define specific timelines for mining lease (ML) and composite licence (CL) auctions:
- For MLs:
- Mining plan approval within 6 months
- Environmental clearance within 18 months
- Lease execution within 12 months
- For CLs:
- Lease execution within 12 months
- G2-level prospecting within 36 months
Completion of milestones within 3 years for MLs and 7 years for CLs ensures avoidance of penalties.
Incentives for Early Production
To promote faster mineral extraction, the amendments allow only 50% of the auction premium to be payable on minerals dispatched before 5 years for MLs and 7 years for CLs from the Letter of Intent (LoI) date. This encourages early mine development and benefits the broader mineral supply chain.
Penalty Framework for Delays
Bidders failing to meet milestones face a 1% monthly deduction from their bank guarantee, though penalties are adjustable against future premium payments if final targets are achieved on time. This ensures a facilitative rather than punitive approach.
Faster Bidder Declaration and LoI Issuance
To improve transparency and efficiency:
- Preferred bidders will be declared immediately after the auction via an electronic platform.
- The LoI must be issued within 30 days of upfront payment and submission of performance security.
- Delays trigger a 5% reduction per month in the second instalment of the upfront payment.
Impact on Previously Auctioned Blocks
The new rules are retroactively applicable, requiring bidders of earlier auctioned blocks to submit performance security within 6 months and meet pending milestones, with timelines starting from the rule’s commencement.
Summary
The amendments by the Ministry of Mines aim to streamline mineral production, incentivize early operationalisation, and strengthen compliance through a balanced mix of rewards and penalties. By enforcing transparent timelines and faster LoI issuance, the reforms are set to boost mining output and efficiency, reinforcing India’s position in the global mineral sector.
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