India considers tighter mining auction rules to deter laggards

India is considering tightening mining auction rules to weed out developers that delay seeking clearances to mine on blocks they win at auctions, two sources familiar with the matter told Reuters, as the country seeks to speed up minerals production.

Since 2015, the government has auctioned 594 mineral blocks, out of which less than 14% or 82 blocks were operational, as per official data.

As part of an internal assessment, India has identified around 50 companies that have not begun mining and in some cases have not yet sought approvals to do so on their awarded blocks over the last five years and may blacklist them from participating in future auctions, the sources said.

Both sources declined to be identified as they were not authorized to speak to the media. The federal Ministry of Mines did not respond to an email seeking comments.

India plans to assess financials of a mining firm alongside past experience before allowing it to bid, one of the sources said.

“We will make the selection criteria more stringent so only renowned companies can participate. This is still in discussion stage,” the source said, adding that it could take a few months before any changes were finalized.

In October, the mines ministry publicly notified penalties to be levied on miners that delayed seeking clearances to operationalize blocks won at auctions.

Last year, the government said it was concerned about slow development of greenfield iron ore mines.

India lags behind major economies such as Australia in mining’s contribution to the total share of gross domestic product, which hovers close to only 2%.

“This is due to a combination of factors, such as regulatory and environmental challenges in obtaining approvals and clearances, inadequate and inefficient infrastructure and investment and technological constraints, among others,” said a joint government and industry report released last year.

(By Neha Arora; Editing by Jamie Freed)