India’s maiden auction for critical and rare earth minerals is facing another setback due to a delay in selecting preferred bidders in all the three rounds.
A Ministry of Mines order dated May 21 said the deadline for the 25 critical mineral blocks listed in the second and third rounds had been postponed from June 11 and June 28 to July 18.
Business Standard has reviewed a copy of the order.
This decision follows the government’s move in March to scrap the auction process for 13 out of 20 blocks offered in the first round due to limited interest from potential investors. Additionally, the deadline for selecting the remaining seven mineral blocks of the first round was extended to July 8 from April 1.
According to government sources, the extensions are due to investors requiring more time to conduct feasibility studies on the mineral blocks.
“The extension in the first round was due to the Lok Sabha elections. However, this time industry players have asked for more time to study the blocks,” a source said.
The Centre has conducted auctions of 38 critical and strategic minerals. The initial tranche included 20 blocks, while the subsequent tranche had 18. The third round only had seven blocks from the 13 cancelled from the first round.
Business Standard reported of a likely delay in the auction in April due to lack of industry participation.
While earlier government sources attributed the delay to the elections, this time it is clear that lack of participation is the only reason, an industry executive said.
Experts anticipate more delay due to the dearth of data on mineral blocks. “Industry is reluctant because of lack of clarity regarding available resources,” a sector expert said.
A total of 56 physical bids and 56 online bids were received for 18 of the 20 blocks, a ministry statement said.
Mining major Vedanta, Jindal Power, and state-owned NLC India are among the players that participated in the first tranche of the auction of critical minerals, Union Mines Minister Pralhad Joshi had said in February.
According to the Mineral (Auction) Rules, 2015, if the number of technically qualified bidders (TQBs) is fewer than three, no TQB is considered a qualified bidder, and the first attempt of the auction is annulled. Since the ministry failed to secure a minimum of three bids for these blocks, it announced a second auction round for the seven blocks on March 14.
During the launch of the auction process on November 29, Joshi had expressed confidence that India would achieve self-sufficiency in critical minerals. He estimated the value of these blocks at Rs 45,000 crore.
However, sector executives had then expressed scepticism regarding India’s ability to achieve self-sufficiency in critical minerals. This is due to lack of clarity on the potential data of the reserves.
According to the United Nations Framework for Classification of Resources, the exploration of minerals is divided into four stages — G4 (reconnaissance), G3 (prospecting), G2 (general exploration), and G1 (detailed exploration).
In addition to the lack of clarity on the reserves, the high cost of investment in exploration has deterred several potential investors from participating in the bidding process.
Most of these minerals are imported from China, which is the leader in their global production and supply. With investors failing to bid, experts suggest India continue to rely on China for securing its raw materials.
India’s dependence on imports for critical minerals such as lithium, cobalt, and nickel poses a significant risk to its green technology transition and energy security, as highlighted in a recent report by rating agency ICRA.
According to the report, China dominates the processing and refining of critical minerals, controlling between 65 per cent and 100 per cent of the global capacity to make battery-grade lithium, cobalt, manganese, and graphite.
“This reliance poses a significant risk to the country’s energy security as it strives to meet its net zero commitments by 2070,” the report said.
WHY THE DELAY
- The delay is due to the lack of participation, an industry executive said
- Experts anticipate more delays due to dearth of data on mineral blocks
- Lack of clarity on the potential data of the reserves roadblocks in India’s ability to achieve self-sufficiency in critical minerals, executives said
- High cost of investment in exploration has also deterred several potential investors from participating in the bidding process
- This decision follows the government’s move in March to scrap the auction process for 13 blocks due to limited interest from investors
- Deadline for selecting the remaining seven mineral blocks was extended to July 8 from April 1