The Ministry of Mines has notified amendment to the Mineral (Auction) Rules, 2015, introducing intermediary timelines for various activities to be completed after issue of Letter of Intent (LoI) till execution of mining lease. Since commencement of auction regime in 2015, a total of 585 major mineral blocks has been successfully auctioned including 34 critical mineral blocks auctioned by the Central government. Initially the pace of auction was slow, however, for past three years, on average over 100 minerals blocks are being successfully auctioned. During the current year, in first seven months only, 112 mineral blocks have already been successfully auctioned.

Along with increase in auctions of mineral blocks, operationalization of the auctioned mines needs to be speeded up for increasing mineral production. In this respect, the Ministry of mines has taken several steps including regular meetings with successful bidders, State governments and other stakeholders. The Ministry has also set up a PMU to monitor operationalisation of mines. As the latest step in its endeavour to fast-track operationalization, the Ministry of Mines has notified amendment to the Mineral (Auction) Rules, 2015 on 17.10.2025 introducing intermediary timelines for various activities to be completed after issue of Letter of Intent till execution of mining lease.

Prior to the amendment, the rules prescribed only a broad timeframe of three years (extendable by an additional two years) for executing the mining lease from the date of issuance of LoI. Failure to meet this milestone resulted in annulment of the block’s auction. However, there was no mechanism to monitor progress across the various stages between the issuance of the LoI and the execution of the lease. Thus, there were limited opportunities for mid-course corrective action.

The amendment in Rules have introduced intermediate timelines which need to be adhered to, otherwise penalties have been prescribed for delay. Penalties for delays in meeting these interim milestones have been kept reasonable. Moreover, if the final milestone is achieved within the stipulated timeframe, any penalties incurred for earlier delays will be adjusted against the auction premium payable. The overarching objective is to ensure timely operationalisation of the mine, rather than to impose punitive measures. The amendment also prescribes incentives for early operationalisation of mines. The amendment is intended to deter potential squatting by bidders.

Important highlights of the Rule amendment are as follows: -

1. Incentive for early commencement of production: In case of auction of Mining Lease (ML), only 50% of auction premium will be payable for the quantity of mineral dispatched earlier than 5 years from the date of issue of LoI. In case of auction of Composite Licence (CL), incentive for early production will be applicable on the quantity of mineral dispatched earlier than 7 years from the date of LoI for CL.
2. Intermediary Timelines:

• Intermediary timelines/ milestone chart has been prescribed for auction of ML [divided into 3 milestones: i. Approval of mining plan (6 months), ii. Grant of environment clearance (18 months), and iii. Execution of mining lease (12 months)]. For CL, two more milestones [i. execution of CL (12 months), and ii. Completion of at least G2 level of prospecting (36 months)] have been added in the beginning.
• For delay beyond the prescribed timelines will attract appropriation of bank guarantee of the bidder to the extent of 1% for delay of each month or a part of month.
• Total timeline from LoI to execution of ML without attracting any penalty in case of auction of ML is 3 years and in case of auction of CL is 7 years.
• In case of delay/ non-compliance of timelines, a committee headed by Director, Mines and Geology (DMG) of the State Government with members from State’s Revenue Dept., State’s Forest & Environment Dept. and IBM shall take decision, after giving reasonable opportunity of hearing to the preferred bidder. Only where delay is attributable to the bidder, penalty will be im[posed.

3. Earlier, in case of ML, performance security is submitted just before grant of ML, i.e. 3-5 years after issue of LoI. The amended rules mandate submission of performance security before issue of LoI. The preferred bidder will get 45 days for submission of performance security along with the 1^st instalment of upfront payment. At present, 1st instalment of upfront payment is payable within 15 days (extendable by another 15 days).
4. The intermediary timelines are also applicable to the mineral blocks which have already been auctioned. In such case:

• the preferred bidders are required to submit performance security within 6 months of commencement of the amendment rules;
• milestones which are remaining to be complied by the preferred bidder will be applicable and the timeline for the first of the milestones remaining to be complied shall start from the date of commencement of the amendment rules.

5. At present, in many cases declaration preferred bidder is delayed after completion of auction. The amended rules provide that preferred bidder shall be declared immediately on conclusion of the auction, automatically by the online electronic auction platform and will be available for public view.
6. In case State Government does not issue LoI to the preferred bidder within 30 days (increased from earlier provision of 15 days) of submission of 1^st instalment of upfront payment and performance security by the bidder, the amount of 2^nd instalment of upfront payment payable to the State Government shall reduce by 5% for the delay of each month or a part thereof in issue of LoI.

The above amendments have been brought in after due consultation with all relevant stakeholders.

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Shuhaib T

(Release ID: 2180860)