According to two people aware of the development, the Centre is now looking at auctioning select mineral blocks under an ‘on-tap’ arrangement with prior clearances to ensure faster development and extraction of mineral resources.

It is also consulting on whether some support could be extended to companies after the auction to finalize the mining plan and arrange for clearances and financing to provide ease of doing business to winning bidders.

The fresh move to reform the current auction mechanism follows delays being witnessed in development of mineral blocks post their auction, with a lot of time consumed in acquiring land for mining and in taking statutory clearances, including those for the environment and forests.

As per official data, out of the 108 iron ore blocks auctioned so far, only 32 (30%) have commenced production.

For other minerals, the proportion is even lower at 10%. In the coal segment, of the 118 captive coal blocks auctioned and allotted, only 51 have begun production.

The record is even worse in the case of commercial coal mining blocks—out of 93 blocks, only four are operational. The ministry of coal has allocated 171 coal mines in total. But only 55 (32%) are currently operational, with the remainder at various stages of development.

“The appetite for taking mineral blocks, particularly coal blocks, among captive users has fallen as most already have one and are busy developing it. The plan to bring “on-tap” mineral blocks that could be brought under production quickly is being discussed and may be considered in future rounds of auctions after finalization,” said one of the two people cited above, a senior government official, on condition of anonymity.

Queries sent to the ministry of mines remained unanswered at press time.

According to a report from ratings agency Crisil, out of about 850 blocks for iron ore, limestone and bauxite launched since the onset of the auction regime in 2015, only 300 blocks have been successfully auctioned so far.

A total of 775 coal blocks were tendered as captive and commercial coal blocks, of which 118 were successfully auctioned and allotted up to September 2023. Further, 53 blocks were allotted to state-owned companies. All these have a cumulative peak rate capacity of over 550 million tonnes.

The government has been keen to ensure that coal as well as non-coal blocks operate as per agreed time schedules, without delay. But with projects still facing delays, it is exploring new way of implementation that will make participation in mining attractive for investors.

The government has already enacted amendments to key laws, such as the Mines and Minerals (Development and Regulation) Act and Coal Mines (Special Provisions) Act, to introduce reforms including ushering in an auction system for allocation of mineral blocks, thus bringing transparency to the process.

Certain other coal sector reforms have also been instrumental in increasing coal production. These include allowing the private sector to mine and sell coal without end-use restrictions, allowing auctioned captive coal blocks to sell up to 50% of their output in the open market, a coal logistics policy, and the Gati Shakti plan to improve coal transportation.

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Updated: 19 Oct 2023, 11:55 PM IST