Mineral auction rules: States asked to decide on exploration permits within a month

The govt has proposed issuing non-exclusive reconnaissance permits within 30 days to any mining company after it submits an online application along with necessary documents

The Centre has proposed major changes for the grant of different mineral concession licences in order to bring flexibility to the mining sector.

In recently introduced mineral auction rules, the government has initiated a two-stage auction and a different method of auction for licences where state governments can grant composite prospecting and mining licences.

The government has proposed issuing non-exclusive reconnaissance permits within 30 days to any mining company after it submits an online application along with necessary documents.

According to the rules proposed by the Mines and Minerals (Development and Regulation) Act, if a state government has inadequate evidence of mineral content after the first stage of reconnaissance, it can directly initiate the auction for a composite licence.

A reconnaissance permit is granted for preliminary prospecting through regional, aerial, geophysical or geochemical surveys and geological mapping. A prospecting licence is granted for exploring, locating and proving mineral deposits. A mining licence is required finally to extract minerals.

The state government will have to first issue a notice for a composite licence after which it will expect companies to apply for non-exclusive reconnaissance permits. The rules propose state governments allow at least one year for reconnaissance before the final tender document for auction is issued.

"All such non-exclusive reconnaissance permits would automatically stand terminated upon the issuance of the tender document," the rules state.

If a state government has adequate evidence of mineral content, it can initiate the process for auctioning mining licences.

However, companies that were granted reconnaissance permits or prospecting licences before the implementation of the new mining law will have the first right on prospecting and mining licences, respectively.

The two-stage auction, to be conducted on an electronic platform chosen by the state government, will be similar for composite and mining licences.

According to the proposed rules, the holder of a non-exclusive reconnaissance permit will not be able to stake any claim on a mining lease if it is successful in discovery of minerals. The permit holder, on discovery, may have to ask the state government for an auction of the mining licence.

It will also have to pay fees of Rs 1,000 per sq km for the area required for exploration. The state government will have the power to auction of any area being explored, and any non-exclusive reconnaissance permit over the notified area will stand terminated.

The Centre has also proposed the company that is granted the mining licence will complete the area's detailed and complete exploration and prepare a feasibility study within five years.