Miners want more bidders for better price discovery at auctions

Fimi wants tender document to contain all geological reports, uniform bidding system across states

Mining companies have suggested a string of changes in the bidding parameters to make auctions of mineral blocks more attractive and ensure better price discovery of the auctioned assets.

As the Union mines ministry mulls changes in the Mineral Auction Rules, 2015, the Federation of Indian Mineral Industries (Fimi), the body lobbying for miners' interest has proposed a slew of changes in the bidding clauses.

"All technically qualified bidders should be allowed to bid and not merely the top 50%. This will moderate the initial bidding percentages. It will have more number of participants and bidders and enhance competition resulting in the better premium over the reserve price," said R K Sharma, secretary general, Fimi.

For better understanding and clarity with regard to geological data, Fimi suggested that the tender document should contain all geological reports of different agencies worked in the area including geological reports and maps. The document should also provide digital and geo-referenced maps. Currently, only compiled reports and data is being provided. Offering additional data can help in the better assessment of mineable reserves and ensure realistic bidding.

Fimi has also pitched for uniform bidding process across all states. "Bidding process time schedules and documentation work should be uniform for all states. Submission of bid documents should be made online", Sharma.

On the eligibility of mining lease, it has suggested that at least 60% of the total production from such a mine be utilised solely for the specified end use. In case the mineral produced is of inferior grade or not suitable for consumption in the end use plant or plant operations are under utilised due to technical reasons or market dynamics than the concerned lessee can be allowed to sell minerals to the other users.

After the selection of the preferred bidder, the state government issues a Letter of Intent (LoI). Fimi feels that along with the LoI, the state government needs to hand over a true copy of all maps and schedule of the mining lease area to enable the successful bidder to facilitate the project. The government can also apprise the successful bidder on the name and designation of the single point of contact authority who will guide the bidder through the entire project till the commencement of the operations. For unsuccessful bidders, the bank guarantee should be returned within 48 hours of completion of the bidding process.