Mining auction winners need to complete projects on time or face penalties

livemint.com:

NEW DELHI : The government is finalizing a carrot-and-stick approach to ensure that mining companies move swiftly towards production at mineral blocks awarded to them at auctions, and to make delays unpalatable. The stick first: delays in work at every milestone within an overall timeline will attract penalties. And the carrot: if delays in meeting milestones are overcome in the full course of the project development, the penalties paid will be adjusted, two people aware of the development said.

Delays would result in deduction of a part of performance security that will be paid by successful bidders to state governments. Performance security is calculated as a percentage of the value of estimated resources (VER) of a mineral block. According to the people cited above, the government is holding consultations with industry on the draft recommendations of a committee that was constituted last year to explore intermediary milestones for activities to be completed from after a letter of intent (Lol) is issued till the execution of a mining lease.

The discussions with industry are expected to be completed by this month. Timelines and milestones for various stages of mining would be notified in March, following which they would form part of the rules of mineral block auctions, including for critical and heavy earth minerals such as lithium. Such resources are being put up for auction for the first time after amendments to Mines and Minerals (Development and Regulation) Act, 1957, one of the two people said.

The policy is being formulated for both mining as well as composite licences (includes prospecting plus mining). But the timelines will differ for the two. For mining licences, the overall timeline will be of 33 months from