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| India’s undeveloped iron ore deposits, along with other strategic metals resources, may be headed for auction if proposed legislation is approved. |
The Indian government has approved development of legislative changes to allocate mineral resources such as iron ore, manganese and bauxite through the auction route, replacing the present discretionary process based on applications.
However, the Indian mining industry has criticized the auction proposal, claiming that it would be the “death knell” for the industry.
Senior government officials said that the cabinet of ministers has approved preparation of an ordinance, which would provide legal framework for adopting an auction approach for allocation of mineral resources to private investors and would help to attract global mining and resource majors such as BHP Billiton and Rio Tinto.
The proposed ordinance would amend provisions of the Mining and Mineral Development and Regulation Act governing the sector and allocation process of mineral resources. Currently, resources are allocated to government and private companies based on application and discretionary powers of the provincial and federal governments.
However, according to the Federation of Indian Minerals Industries (FIMI), the industry representative organization, “Those proposing changes in mineral allocation through auction are not aware of how the mining industry functions in rest of the world. The framers of the new rules assume that India possesses minerals in abundance but not readily available in other parts of the world, whereas in reality, minerals available in India are produced in larger volumes more competitively in several other countries.”
Because the auction process would entail investors bidding large amounts of money to gain access to resources, bidding would only focus on high-grade deposits leading to selective mining and thereby neglecting issues like efficient exploitation of low-grade ore, zero-waste best mining practice and minimizing production costs to check end use prices, FIMI contended in a communication to the Ministry of Mines.
