Auctions can't get new mines running, no lease inked for greenfield assets

Before the auction regime, 2,754 mining leases were executed during 2006-10 and 494 were executed between 2010 and 2014, most of which were greenfield

The process of mineral auctions has crippled the pace of development of greenfield mines in the country. Since the enactment of the amended Mines and Minerals- Development & Regulation (MMDR) Act, 2015, and the subsequent framing of Mineral Auction Rules, mining lease is yet to be executed even for a single greenfield mineral block.

Data from the Union mines ministry shows 68 mineral blocks have been actually auctioned. Of this eight were offered as composite licenses- prospecting licenses (PL) cum mining lease (ML) and the rest 60 being ML. Out of the 60 MLs, 42 are greenfield mines, 14 Category C mines auctioned by Karnataka and the balance four being mining leases lapsing by March 31, 2020.

Though four MLs have been executed in respect of the Category C mines in Karnataka, not a single ML has been entered into for a virgin mine.

Even after three to four years of auction, all the greenfield projects are far from being operational. None of these has been able to reach mine development stage and are languishing for want of various clearances. Of the 14 auctioned ‘C’ category mines in Karnataka, despite being previously operational and possessing valid environment clearance (EC) and forest  clearance (FC) , only four have been able to operate and remaining 10 are yet to receive all permissions or approvals to start mining. Only one PL-cum-ML has been granted so far under the auction regime in last four years.

“Clearly, auction has failed to bring mines into operation and thus create the much needed domino effect in the economy. Most adversely, auction has resulted in negative NPV (Net Present Value) for many potentially viable mineral deposits and has put these out of the list of prospects. Since many of these deposits will not be developed, it means less employment opportunities, lower production and hence lower revenues than what could have otherwise been accrued to states as mineral royalty”, said R K Sharma, secretary general of Federation of Indian Mineral Industries (Fimi).

He opined that auctions have been a total failure in execution and operationalization of mines in the country, bringing job creation in mining sector to a halt.

Before the introduction of the auction regime, 2,754 mining leases were executed during 2006-10 and 494 mining leases were executed between 2010 and 2014, most of which were greenfield, data from the Indian Bureau of Mines (IBM) illustrated. After the auction regime, only four brownfield mining leases have been executed, having pre-existing EC and FC. In the auction regime, not even a single mining lease has been executed in case of green field auction blocks.

The experience in case of exploration- Reconnaissance Permit (RP) and PL under auction regime has been very discouraging- only 1 PL- cum- ML has been granted so far under the auction regime in last four years. On the contrary, 123 RPs and 688 PLs were granted prior to the auction regime during 2006-14.