Content from the Brookings Institution India Center is now archived. After seven years of an impactful partnership, as of September 11, 2020, Brookings India is now the Centre for Social and Economic Progress, an independent public policy institution based in India.
The Mines and Minerals (Development and Regulation) Act of 1957 regulates the mining sector in India, including specifying the rules for the allocation of mining leases. The Mines and Minerals (Development and Regulation) Amendment Act, 2015 introduced, amongst other changes, the system of auctions to be used by state governments when granting mining leases and prospecting licence-cum-mining leases (also known as a composite licence). The purpose of changing the method of allocation of the resources was to remove the discretion that state governments previously had, and move towards a fair, objective, and transparent system.
As of October 4, 2019, 70 mineral blocks have been auctioned, with an estimated value of resources of Rs 2,52,515.90 crores. This information has been released by the MoM, with an assumption that the estimated quantity of resources in the mineralised area will all be mined. Mining companies will have to make statutory payments of royalties for the minerals mined, and make contributions to the District Mineral Foundation fund, as well as the National Mineral Exploration Trust. The total estimated payments the miners will have to make over the lifetime of the mines comes to Rs 2,02,125.99 crores, or 80% of the value of resources, leaving just Rs 50,390.91, or 20% of the value of resources, with the mining companies.
This paper seeks to highlight and discuss some of the peculiarities that have come out of the 70 mineral blocks that have been auctioned since MMDR-2015 has come into effect, and delve deeper into the auctions of specific mineral blocks.