Inadequate exploration and geological data was hindering India’s provincial governments from setting the ball rolling for auction of “composite mining licenses.” Provincial governments like Orissa, Karnataka, and Chhattisgarh have pleaded that they do not have the financial nor technical wherewithal to complete G3 (prospecting stage) of exploration, as was made mandatory by the federal laws from auction of composite mining licenses by the provincial governments.

As per the federal laws, G2 (general exploration) and G1 (detailed exploration) stages needed to be complete in case of the auction of a single specified mineral resource, but a higher G3 stage was necessary in the case of a composite license required to mine all mineral resources in a single block.

As per rules for the auction of mineral resources like iron ore, bauxite, limestone, provinces had been empowered under the newly promulgated Mines, Minerals Develop ment and Regulation Act (MMDRA), to auction and grant “composite licenses” wherein a successful bidder would be entititled to “to mine all estimated resources and minerals discovered in the area demarcated using station and differential global positioning systems.”

The provincial governments have pointed out that since the latter did not have the technical and financial resources of completing exploration to the G3 stage and since information relating to evidence of all mineral resources could not be provided to bidders, the auction process would not yield optimal bidding valuations.

While the federal government intended to unleash the country’s mineral potential by adopting the mandatory auction route for the allocation of mineral resources and empowering the provinces to conduct the auctions, the lack of sufficient exploratory and geological data had emerged as a major roadblock.