New Delhi: The Ministry of Mines has introduced amendments to the Mineral (Auction) Rules, 2015, on October 17, 2025, to accelerate the operationalisation of auctioned mineral blocks by setting intermediary timelines for various activities following the issuance of a Letter of Intent (LoI) until the final execution of the mining lease.
Previously, the rules allowed a broad period of three years, extendable by two more years, for executing the mining lease, with failure resulting in the annulment of the auction. The new amendments introduce specific intermediate milestones with associated penalties for delays.
Key provisions of the amendment include:
Mandatory Intermediary Timelines: The new rules introduce a schedule of intermediate timelines that must be adhered to after the LoI is issued. This aims to prevent long-drawn delays in obtaining necessary clearances and starting mine operations.
Penalties for Delays: Penalties are now prescribed for delays in meeting these interim milestones if the delay is deemed attributable to the preferred bidder. A penalty involves the appropriation of the bidder’s bank guarantee to the extent of one percent for each month or part of a month of delay. However, penalties incurred for earlier delays will be adjusted against the auction premium payable if the final milestone is achieved within the overall stipulated timeframe, signifying a focus on timely operationalisation rather than solely punitive measures.
Incentives for Early Production: To encourage faster commencement of mining, incentives have been introduced. For a Mining Lease auction, only 50 percent of the auction premium will be payable for the quantity of mineral dispatched earlier than five years from the date of the LoI. For Composite Licence auctions, this incentive is applicable for early production dispatched earlier than seven years from the date of the LoI.
Performance Security Requirement: The rules now mandate the submission of performance security before the issuance of the LoI for a Mining Lease. The preferred bidder is given 45 days to submit the performance security along with the first instalment of the upfront payment.
Faster Preferred Bidder Declaration: The amended rules require the preferred bidder to be declared immediately upon conclusion of the auction, automatically by the online electronic auction platform, with the results made available for public view.
Relief for State Government Delays: If the State Government fails to issue the LoI within 30 days (up from the earlier 15 days) of the bidder submitting the first instalment of upfront payment and performance security, the amount of the second instalment of upfront payment payable by the bidder will be reduced by five percent for each such month of delay.
These intermediate timelines are also applicable to mineral blocks that have already been auctioned, providing a fresh framework for existing projects.