Ministry of Mines Introduces Intermediate Timelines to Fast-track Operationalisation of Auctioned Mineral Blocks

In a significant move aimed at expediting mine development and mineral production, the Ministry of Mines has notified amendments to the Mineral (Auction) Rules, 2015, introducing intermediate timelines between the issue of Letter of Intent (LoI) and the execution of mining lease.

Since the launch of the auction regime in 2015, 585 major mineral blocks have been successfully auctioned, including 34 critical mineral blocks by the Central Government. While the pace of auctions has accelerated — with over 100 blocks auctioned annually in the past three years and 112 blocks already auctioned in 2025 — the operationalisation of auctioned mines has often faced delays.

To address this, the Ministry has introduced milestone-based timelines with reasonable penalties for delay and incentives for early commencement of production.

Key Amendments Introduced include Incentive for Early Production:

• For mining leases (ML), only 50% of the auction premium will be payable on mineral quantities dispatched within five years from the LoI date. For composite licences (CL), the same incentive applies for dispatches made within seven years.

Intermediate Timelines:

• Milestones are now fixed for activities such as mining plan approval (6 months), environmental clearance (18 months), and lease execution (12 months). For CLs, two additional milestones—execution of CL (12 months) and completion of G2-level prospecting (36 months)—have been added.

Penalty for Delay:

• Delays beyond prescribed timelines will attract a penalty of 1% of the bank guarantee per month.

Performance Security:

• Submission of performance security is now mandated before issuance of the LoI, along with the first instalment of upfront payment.

State Accountability:

• If a State Government delays LoI issuance beyond 30 days of receiving upfront payment and security, the next instalment payable by the bidder will reduce by 5% per month of delay.

Transparency in Auction:

• The preferred bidder will now be automatically declared immediately after the auction through the online platform, ensuring greater transparency.

The amendments also apply retrospectively to previously auctioned blocks. Preferred bidders for such blocks must submit performance security within six months of the new rules’ commencement, and adhere to the remaining milestones accordingly.

The Ministry stated that these changes are designed to ensure timely mine operationalisation rather than impose punitive measures, deterring speculative bidding and encouraging faster production.