Land acquisition's key role in mineral block auctions

As the recently unveiled National Mineral Exploration Policy paves way for greater private participation in the sector, experts believe states will have to brave challenges in the form of land acquisition and insufficient expertise in conducting lease auctions.

Cleared by the Cabinet on June 29, the new policy aims to accelerate exploration by getting more of the private sector and foreign direct investment. As many as 100 mineral blocks of 100 sq km each are to be put up for sale. SBI Capital Markets is working on the auction modalities and its report is expected in the three months. The auction could take place by the end of the calendar year.

The government is ascertaining the value of mineral blocks to be auctioned, an official said. These 100 blocks are in Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand, Bihar, Rajasthan, Andhra Pradesh and Karnataka. The minerals that can be excavated from these include gold, diamond, manganese and limestone.

R K Sharma, secretary-general, Federation of Indian Mineral Industries, said the incentives offered by states would play a great role in attracting investment. Land availability will be a challenge, he said.

Kameswara Rao, leader, power and mining, PwC India, says how well states do in monetising their mineral wealth would depend on their institutional capability in designing proper bids, structuring of efficient contracts and running a transparent bid process. They should each, he said, put in place a comprehensive mineral development strategy.