Winning bidders for mineral block to pay 0.5% upfront payment

The Centre has proposed an upfront payment of 0.5 per cent of value of resources by companies who secure licence for mining major minerals like iron ore through the proposed auction.
According to the draft rules of auction under the MMDRA Act, 2015, companies need to make an upfront payment equal to 0.5 per cent of value of resources- determined by multiplying the estimated quantity of minerals in metric tonne with the average price per metric tonne of such mineral of average grade.
Besides, successful bidders will also have to provide a performance security, which shall be adjusted every five years so that it continues to correspond to 0.5 per cent of the reassessed value of resources.

It further said the performance security may be invoked as per the agreement for development and production between the government and successful bidders.
The payments are to be made to the state governments in three instalments of 10 per cent, 10 per cent and 80 per cent.
The draft rules said the upfront payment will be adjusted within five years of commencement of mining operations.

Last month, the Mines and Minerals (Development and Regulation) Amendment (MMDRA) Act, 2015 was passed by Parliament paving way for auction of major mineral bearing mines.
MMDRA Act, 2015 empowers the Centre to prescribe terms and conditions and procedures for bidding which include production sharing or royalty payment or a combination of both.

The Mines Ministry has already identified 199 mines which contain minerals like iron ore, bauxite and manganese ore that can be allocated through the auction route. These are located in mineral-rich states like Karnataka, Madhya Pradesh, Odisha, Gujarat and Maharashtra.