Wednesday, August 26, 2015

Non Coal Auctioning Perspective is different from Coal Auctioning

 The Ministry of Mines Government of India has recently notified the Mineral (Auction Rules, 2015). through notification dated-18th May 2015. These rules shall apply to all minerals except minerals notified as minor minerals specified in clause (e) of section 3 and minerals specified in part A & B of the Schedule to the Act. The Government proposes to auction grant of Mining Lease where mineral content of an area has been established (G-2) stage and composite license of mineral deposits in the minerals bearing area where preliminary exploration (G-3) has been completed to establish Inferred Minerals Reserve.   The auctioning proposed by the Ministry of Mines is similar to the auctioning of coal blocks being conducted by Ministry of Coal, however the perspectives are fundamentally different.
It needs to be understood that the occurrence, nature and disposition of non-coal minerals is fundamentally different as compared to coal. While coal is a uniformly occurring stratified bedded deposit comprising gentle to moderately dipping coal seams, Non –Coal minerals specially copper, lead , zinc, gold, manganese generally occur as steeply dipping veins and lenses exhibiting pinch and swell character along the dip and strike  of the mineralization. Therefore techniques of exploration for non coal minerals is radically different as compared to coal exploration. While exploration of coal is simple involving no special technique because of its uniform bedded nature, exploration of metalliferous deposits require to be conducted after mapping and assessing the geo-structural elements which control the mineralization. A three dimensional approach is required for identifying hot spots i.e favorable locales of mineral concentration. A state of the art multi pronged exploration  technique involving mapping of the geological formation including gossans and their Structural elements like dip, strike, plunge of folds and pucker lineation’s etc. followed by identification of geo chemical halos through low detection multi elemental geo chemical sampling is required to be conducted. Mineral search would ideally require geo physical surveys like Self Potential, EM, Gravity for identifying deep seated/buried mineral deposits having no signatures on the surface, Integration of the above studies would lead to the launching of an exploration, program to target the ore body through deviation controlled drilling by angular boreholes.
The Ministry of Mines follows the United Nation Framework Clarification for assessment of Mineral Reserve & Resources. The UNFC consist of three axes.  Geological Assessment (G), Feasibility Assessment (F) Economic viability (E). Presently exploration in India is mostly confined to the Geological Axes (G-2 & G-3 stage) with little or no information on the Feasibility assessment or Economic viability (axes).This makes it extremely difficult to take an investment decision on commercial mining of mineral deposits.
The Ministry of Mines is proposing that the State Government may initiate auction process for grant of mining lease with respect to an area within the state where minerals content have been established. However all the deposits being put up for auction of mining lease would have information only on one axis is Geological Assessment and up to G-2 stage (Identified Resource). Therefore the successful besides would have to conduct detailed exploration along with feasibility studies and assess Economical viability of the prospect before mining can be taken up . This implies that to explore the deposit it would take considerable amount of time.
For auction of composite license a mineral leasing area should have had Preliminary Exploration (G3) done to establish Mineral Inferred Resource. The successful bidder would have to carry out his own exploration programme to establish the existence of mineral deposit if any in the area the chances of which could be remote. In case a mineral deposit is establish, he would apply to the state Government for Mining Lease.   

It can be seen from above that both ML & CL would involve detailed techno commercial studies in the Economic; Viability and Geological axes before mining can take place. Selection of the right mineral deposit/ mineral bearing area being put for auction would be the key to success or failure.


  1. Very good article on Non Coal Bidding.

  2. Very good article 

  3. Very important article on Non-Coal Auctioning

  4. The fact that Non Coal auctioning is fundamentally different from Coal auctioning is well said.The key would lie in comprehensive and thorough 360 degree Due Diligence to arrive at the correct investment Decision by the bidders.

  5. Odisha identifies 13 mineral blocks for auctions likely soon.

  6. I agree, non-coal auctioning would definitely need a deeper diligence.

  7. I also agree it is going to be a different ball game.

  8. Very True !! Now it’s Geo-Science and Geo-economics for acche din in mining industries

  9. To take a correct investment decision Due Diligence along the UNFC Axis (Economic, Feasibility and Geological Axis) is the key towards achieving success as it is said above, that the Mining assets have inadequate data room making it a high risk venture.

  10. A Very Enlightening Article! Reflects the absolute need of the hour very finely on deeper diligence for Non-Coal Auctioning!

  11. Will auctioning of Composite License (CL) be a risky proposition ?

  12. This means it is incredible space for techno-commercial study in Non Coal area along with auctioning .

  13. Good Opportunity for Non-Coal auctioning...

  14. The great opportunity to non power sector that will help to Indian economy.

  15. Sir, Very Good Article but there are some query which i would like to know :

    1) Whether Mining lease will be Auctioned only for 30 years ?
    ==> Sir , As per Currently Scenario Mineral concessions for major minerals are granted under the provisions of following Acts and Rules
    (i) Mines and Mineral (Development and Regulation) Act, 1957. (MMDR – Act 1957)
    (ii) Mineral Concession Rules 1960. (MCR – 1960)
    (iii) Mineral Conservation and Development Rules – 1988 (MCDR – 1988)
    and Following types of mineral concessions are granted for major minerals :
    i) Reconnaissance permit
    ii) Prospecting licence
    iii) Mining lease.

    Under Mining lease it is stated that "Maximum period for which mining lease may be granted shall not exceed thirty years. Minimum period for which mining lease granted shall not be less than 20 years.
    2) A mining lease may be renewed for a period not exceeding twenty years in each case ( 1st & 2 nd renewal)

    2) Whether Above referred Acts will be applicable for auctioning purpose or separate act will be Enacted ?

    3) Sir, Whether as per your prediction , Minor minerals will also be put for auctioing in future. ?