R/€ = 16.27 Change: -0.01
R/$ = 14.53 Change: -0.01
Au 1343.25 $/oz Change: -0.91
Pt 801.53 $/oz Change: 4.27
 
 
R/€ = 16.27 Change: -0.01
R/$ = 14.53 Change: -0.01
Au 1343.25 $/oz Change: -0.91
Pt 801.53 $/oz Change: 4.27
 
 
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Indian mining industry seeks SPV route for speedier auction of new mineral blocks

13th May 2019 BY: Ajoy K Das
Creamer Media Correspondent

KOLKATA (miningweekly.com) – Indian industry representative bodies have requested that states first secure all regulatory approvals, such as environmental, forest and surface rights, for mineral assets, put into special purpose vehicle (SPVs), that go up for auction.

The industry bodies argue that such a process will shorten the gestation period between securing a mineral asset at the auction and bringing it into operation. At the same time, it will also ensure higher levels of investment in mineral block exploration.

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A host of private mineral companies, the Federation of Indian Mineral Industries and the Federation of Indian Chambers of Commerce and Industries, have supported the presentation made to government.

The trigger for the industries’ concern has been the fact that while about 300 mineral concessions a year were granted before 2015, the number has fallen to about 15 concessions a year after the promulgation of the Mines, Minerals Development and Regulation Act 2015, which made the auction route mandatory for all mineral blocks.

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Industry bodies pointed out that converting auctioned assets to production had been largely unsuccessful in recent years and that only a few blocks had been brought into production in the last four years, as successful investors had to run around seeking mandatory approvals leading to long gestation periods and time and cost over-runs in project implementation.

While the industry favours putting mineral blocks with explored and known reserves under an SPV, bundled with all mandatory approvals, before auction, in the case of blocks with minimal reserves or unexplored blocks, the allocation should be on “first come, first served’ basis. It has been pointed out that auction of mineral blocks is not a global practice and competitive bidding is one of the major reasons for global resource majors shying away from investing in the Indian mining industry.

Even as the industry is seeking speedier auction and operationalisation of new mineral blocks, the ongoing Indian elections have triggered the spectre of imminent delays in the renewal of mining leases through the fresh auctioning of 288 mineral blocks of existing mining leases slated to expire in March 2020.

Industry analysts point out that with the elections ending, the counting of votes on May 23 and a new government expected to be in place in June, there will be an inevitable time lag before the government can push ahead with the fresh auction of mining leases of these 288 mineral blocks. State governments are required to hold the bidding process of all blocks well before the expiry deadline of March 2020, and even a small slippage will result in closure of these mines before new lease holders can gain control of the assets. 

EDITED BY: Creamer Media Reporter
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