India Issues Executive Order to Start Mineral Mine Auctions

India issued an executive order to start auctions of iron ore, bauxite, zinc and copper and other mineral mines, following a similar directive in October for coal quarries.

The order dated yesterday, posted on the mining ministry’s web site, ends an almost six-decade old system of awarding mines at the discretion of the provincial and federal governments. The ordinance doesn’t apply to lignite and atomic materials.

Prime Minister Narendra Modi is seeking to bring transparency in mineral allocations and boost supplies for steel mills and aluminum smelters facing raw material shortages. The mining ordinance is the fourth executive action brought by the government, which is struggling to muster support for its policies in the upper house of parliament, where it is in a minority.

The order introduces a clause that eases permit renewals for existing mines, setting aside an older law that hindered the process and caused closures. Existing permits with companies using the mines to supply their own factories will be extended to March 31, 2030, whereas those selling the minerals will receive extensions until March 31, 2020.

All mining leases will now be granted for a period of fifty years, instead of thirty years earlier, according to the order.

The ordinance, which was approved by President Pranab Mukherjee, will lapse if it fails to get the support of both houses within six weeks of the opening of the next session of parliament.

State governments will identify mines for auctioning, while the federal government will prepare rules for bidding. The winners will have to spend an additional amount of as much as a third of their royalty for local welfare.

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