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Government of India Ministry of Mines

Robust MINERAL Auction Regime

4th NATIONAL CONCLAVE ON MINES AND MINERALS July 13, 2018

Indore, Madhya Pradesh

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ALLOCATION OF MINES :

THEN AND NOW

2015

DISCRETIONARY ALLOCATION

SEVERAL YEARS

E- Auction

105 DAYS SPEEDY

GRANT

BENEFIT

SHARING ROYALTY TO STATES

AUCTION PREMIUM TO STATES

DMF FOR AFFECTED AREAS

NMET FOR EXPLORATION

EASE OF

LEASE

UNIFORM LEASE FOR 50 YEARS

EASY TRANSFERABILITY

LEASE UP TO 30 YEARS

RENEWALS

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ROAD TO AUCTIONS

LEGAL FRAMEWORK FOR NEW PROCESS Mineral (Auction) Rules, 2015 and subsequent amendment in 2017

Minerals (Evidence of Mineral Contents) Rules, 2015

Mine Development and Production Agreement

Model Tender Document for States

NEW AREAS HANDHOLDING Block Identification – GSI, IBM, MoM

DGPS & Total Station Survey – MECON

GR Digitisation – GSI, MECL

Transaction Advisory – SBICAPs

Auction Platform – MSTC

Coordination – MoM

303 mineral exploration reports handed over to the State Governments by GSI & MECL to kick-start auctions

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MINERAL AUCTION PROCESS

2 STAGE AUCTION PROCESS

• TEECHNICAL BID WITH IPO

• FORWARD E-AUCTION : REVENUE SHARING, UPFRONT PAYMENTS, PERFORMANCE SECURITY

REVENUE SHARING MODEL (I.E. BIDDING PARAMETER – PERCENTAGE VALUE OF MINERAL DISPATCHED), LINKED TO IBM

NOTIFIED PRICE OF THE MINERAL

NOTIFIED MINERAL - DIRECTLY FOR ML WITH G2 LEVEL EXPLORATION

OTHER MAJOR MINERALS - ALLOWED FOR CL WITH G3 EXPLORATION

RELAXATON PROVISIONS

• Registration on e-Auction platform

Bidder

• IPOs opened after technical scrutiny

Qualified Bidder • Highest Initial price

taken as base

• Highest Bid in E-Auctions

Preferred Bidder

• Payment of 1st instalment

• LOI issued (105 days)

Successful bidder

5 5

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2. STATUS OF MINERAL AUCTIONS

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Auctions till now

• Total 87 major mineral blocks have been notified across 9 states for auction in 145 attempts

• Total blocks have been successfully auctioned till 12.07.2018= 43 blocks

• Estimated value of resources auctioned = about Rs 2 Lakh crores

• Total estimated revenue to the state government over the lease period = Rs 1.55 lakh crores

• Additional contribution from auctions = Rs 1.2 lakh Cr (about 80 %)

• Statutory Payments

• Royalty = Rs 31,907 Cr

• DMF contributions = Rs 3,191 Cr

• NMET Contributions = Rs 638 Cr

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Auction Progress (In Rs crore)

Year 2015-16 2016-17 2017-18 2018-19 Total

Number of blocks auctioned 6 15 14 8 43

Mineral 4 Limestone, 1 Iron Ore,

1 Gold

7 Iron Ore, 5 Limestone,

1 Manganese, 1 Diamond, 1 Gold

10 Limestone, 2 Iron Ore,

1 Gold, 1 Bauxite

4 Limestone, 2 Iron Ore, 1 Graphite,

1 Manganese

43 Blocks (23 Limestone, 12 Iron Ore, 3 Gold,

2 Manganese, 1 Graphite, 1

Bauxite, 1 Diamond)

Estimated value of the resources (in cr)

29,817 63,372 90,136 16,456 1,99,782

Additional Contribution through Auction (in cr)

13,032 44,501 53,850 8,337 1,19,721

Royalty (in cr) 4,565 9,564 14,895 2,881 31,907

DMF (in cr) 456 956 1,489 288 3,191

NMET ( in cr) 91 191 297 58 638

Total of Royalty + DMF + NMET (Statutory Payments)

(in cr) 5,113 10,712 16,683 3,227 35,736

Total revenue to the Govt. over 50 years (in cr)

18,145 55,213 70,533 11,564 1,55,457

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Auction Summary

State Blocks for which auction process has been completed Total Number of blocks for which

auction process has been completed NIT Ongoing

Successful Annulled

Andhra Pradesh 3 Limestone Blocks 2 Limestone Blocks 5 Limestone Blocks 7 Blocks

(6 Limestone, 1 Gold)

Chhattisgarh 5 Blocks

(4 Limestone, 1 Gold) 2 Limestone

Blocks 7 Blocks

(6 Limestone, 1 Gold) -

Gujarat 3 Limestone Blocks 5 Limestone Blocks 8 Limestone Blocks -

Jharkhand 5 Blocks

(2 Limestone, 2 Gold, 1 Iron Ore)

- 5 Blocks

(2 Limestone, 2 Gold, 1 Graphite)

3 Graphite Blocks

Karnataka 7 Iron Ore Blocks 7 Iron Ore Blocks 14 Iron Ore Blocks 8 Iron Ore

Blocks

Madhya Pradesh 6 Blocks (3 Limestone, 1 Graphite, 1 Iron Ore, 1

Diamond)

5 Blocks (4 Limestone, 1 Bauxite)

3 Blocks (2 Limestone, 1 Diamond)

-

Maharashtra

3 Blocks (1 Limestone, 1 Manganese,

1 Bauxite)

14 Blocks (4 Bauxite, 3 Limestone,

2 Iron Ore, 2 Copper, 2 Tungsten, 1 Manganese)

17 Blocks (5 Bauxite, 4 Limestone, 2 Iron Ore, 2

Manganese, 2 Copper, 2 Tungsten)

-

Odisha

5 Blocks (3 Iron Ore,

1 Manganese, 1 Limestone)

4 Limestone Blocks

9 Blocks (5 Limestone, 3 Iron Ore,

1 Manganese) 2 Iron Ore Blocks

Rajasthan 6 Limestone Blocks 5 Blocks

(4 Limestone Blocks, 1 Copper & associated minerals)

10 Blocks (9 Limestone Blocks,

1 Copper & associated minerals) -

Tamil Nadu - - - - Telangana - - - -

Total

43 Blocks (23 Limestone, 12 Iron Ore, 3

Gold, 2 Manganese,

1 Graphite, 1 Bauxite, 1 Diamond)

44 Blocks (24 Limestone, 9 Iron Ore,

5 Bauxite, 2 Copper 2 Tungsten, 1 Manganese,

1 Copper & associated minerals) (102 attempts)

87 Blocks (47 Limestone, 21 Iron Ore,

6 Bauxite, 3 Manganese, 3 Gold, 2 Tungsten, 2 Copper,

1 Graphite, 1 Diamond, 1 Copper & associated minerals)

(145 attempts)

20 Blocks (10 Iron Ore, 6 Limestone,

3 Graphite, 1 Gold)

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Auctioned Mineral Blocks & Pipeline State

Type of Mineral Concession Est. Resources of Auctioned Blocks

(Thousand Cr)

Blocks in pipeline for 2018-

19 ML PL cum ML

Odisha 4 Blocks (3 Iron

Ore, 1 Limestone)

1 Manganese

42

8 Blocks (3 Limestone, 2 Iron Ore, 1 Manganese, 1 Bauxite, 1 Iron Ore &

Manganese)

Rajasthan 6 Limestone

Blocks

-

49

15 Blocks (10 Limestone, 4 Copper, 1 Copper & Associated Metal)

Gujarat 3 Limestone

Blocks

- 35

8 Blocks (5 Limestone Blocks, 3 Bauxite)

Karnataka 7 Iron Ore

Blocks

-

31

8 Blocks (7 Manganese & Iron Ore, 1 Iron Ore)

Chhattisgarh 4 Limestone (1

small*)

1 Gold

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11 Blocks (7 Bauxite, 4 Limestone)

Big Blocks & Small Blocks

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Auctioned Mineral Blocks & Pipeline State

Type of Mineral Concession Est. Resources of Auctioned Blocks

(Thousand Cr)

Blocks in pipeline for 2018-19

ML

PL cum ML

Jharkhand 2 Blocks (1 Iron

Ore, 1 Gold)

3 Blocks (2 Limestone, 1

Gold)

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20 Blocks (6 Graphite, 4 Limestone, 3 Bauxite, 2 Iron Ore, 2 Emerald, 1 Manganese, 1 Copper,

1 Dolomite / Limestone)

Maharashtra

3 Blocks (1 Limestone, 1 Manganese, 1 Bauxite)

-

2

13 Blocks (6 Bauxite, 3 Limestone, 2 Copper, 1 Iron

Ore, 1 Manganese)

Andhra Pradesh 3 Limestone

Blocks -

2 -

Madhya Pradesh

5 Blocks (2 Limestone, 1 Limestone, 1

Graphite, 1 Iron Ore

1 Diamond

4

13 Blocks (6 Limestone, 3 Zinc, 2 Gold, 1

Bauxite,1 Manganese)

Tamil Nadu - - - 3 Molybdenum Blocks Telangana - - - 3 Limestone Blocks

Total

37 Blocks (21 Limestone,

12 Iron Ore, 1 Gold, 1

Graphite, 1 Manganese, 1 Bauxite)

6 Blocks (1 Manganese, 2

Gold, 2 Limestone & 1 Diamond) 200

102 Blocks (38 Limestone, 21 Bauxite, 8 Iron Ore

& Manganese, 6 Iron Ore, 7 Copper, 6 Graphite, 4 Manganese, 3 Zinc, 3 Molybdenum, 2 Emerald, 2 Gold, 1

Copper & Associated Metal, 1 Dolomite / Limestone)

Big Blocks & Small Blocks

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List of Companies wining the auction of mineral blocks S. No. Preferred Bidder No of Blocks awarded

1 JSW Ltd 5 Iron Ore

2 Dalmia Cement (Bharat) Ltd 3 Limestone

3 Shree Cement 3 Limestone

4 Emami Cement 2 Limestone

5 Ambuja Cement 2 Limestone

6 JSW Cement Ltd 2 Limestone

7 MSPL Ltd 2 Iron Ore

8 Sree Jayajothi Cements Pvt Ltd 2 Limestone

9 Burnpur Cement 2 Limestone

10 Ultratech Cement 2 Limestone

11 Digiana Industries Pvt Ltd 2 Limestone

12 Bhushan Steel 1 Iron Ore

13 Bhushan Power & Steel Limited 1 Iron Ore

14 Thriveni earth movers Pvt Ltd 1 Manganese Ore

15 Essar Steel 1 Iron Ore

16 Bansal Construction Company 1 Diamond

17 Penna Cements 1 Limestone

18 Century Cement 1 Limestone

19 Vedanta Ltd 1 Gold

20 Maithan Ispat Ltd 1 Gold

21 Rungta Mines Ltd 1 Gold

22 Adani Cementation Ltd 1 Limestone

23 Gamma Iron India Ltd 1 Bauxite

24 Shanti GD Ispat 1 Manganese Ore

25 Urmila Dilip Chandan 1 Graphite

26 Swastik Buildmat India Pvt Ltd 1 Iron Ore

27 South West Mining Ltd 1 Iron Ore

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Reasons for Failed Auctions

1. Mineral Block Factors Quantity and grade of ore

Quality of Exploration and Mineralization Studies / Geological reports

Land Ownership

Provisions for ancillary activities included in Area

2. Market Factors Demand-supply scenario of mineral industry

General dull market scenario for the cement and steel industry prevailing at that point in time

3. Other Factors IBM notified average sale prices being too high

End use reservation

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MINERAL AUCTION - ASSESSMENTS

Transparency & Certainty

Auction is only small part of mineral grant process

LOI used to take years - drastically cut to within ‘38’ days after auction of block

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Thank You