TFP Bureau, New Delhi, October 19, 2025: In a major reform aimed at expediting the commencement of mining operations, the Ministry of Mines has amended the Mineral (Auction) Rules, 2015 to introduce intermediate timelines for activities between the issuance of the Letter of Intent (LoI) and the execution of mining leases. The move is designed to ensure faster operationalisation of auctioned mineral blocks and prevent delays that have hindered production in the past.
Since the launch of the auction regime in 2015, a total of 585 major mineral blocks have been auctioned across the country, including 34 critical mineral blocks by the Central Government. While the initial years saw a slow pace of auctions, the momentum has picked up considerably — with over 100 mineral blocks being auctioned annually in the past three years. In just the first seven months of 2025, 112 mineral blocks have already been successfully auctioned.
With auctions gaining momentum, the focus has now shifted to ensuring timely operationalisation of mines. The Ministry has been holding regular consultations with successful bidders, State Governments, and other stakeholders, supported by a dedicated Project Management Unit (PMU) to monitor progress. The newly notified amendment, issued on October 17, 2025, introduces clear intermediate milestones, incentives for early commencement, and moderate penalties for delays.
Under the amended rules, the total period from LoI issuance to mining lease execution will remain three years for Mining Leases (ML) and seven years for Composite Licences (CL). However, key interim milestones — such as approval of mining plans, environmental clearance, and execution of leases — must now be met within specified timelines. For instance, ML holders must secure mining plan approval within six months, environmental clearance within 18 months, and execute leases within 12 months thereafter.
To encourage timely execution, the Ministry has introduced incentives for early production. In the case of MLs, only 50% of the auction premium will be payable for minerals dispatched within five years of LoI issuance, while for CLs, the same applies for minerals dispatched within seven years.
At the same time, the rules prescribe penalties for delays, with 1% of the bidder’s bank guarantee forfeited for each month of delay. However, penalties will be adjusted if the final milestone is achieved within the stipulated time, reinforcing the government’s focus on operational outcomes rather than punitive measures.
In a key procedural change, performance security must now be submitted before the issuance of the LoI, rather than several years later. Preferred bidders will have 45 days to submit performance security and the first instalment of the upfront payment.
For already auctioned mineral blocks, the new timelines will also apply, with preferred bidders required to submit performance security within six months of the amendment coming into effect. The rules also make the declaration of preferred bidders automatic upon the conclusion of electronic auctions, ensuring greater transparency.
Further, to promote accountability among State Governments, the amended provisions state that if the LoI is not issued within 30 days of payment and performance security submission, the second instalment payable to the State will be reduced by 5% for each month of delay.
These amendments, finalised after wide consultation with stakeholders, mark a significant step toward improving efficiency and transparency in India’s mining sector — ensuring that auctioned blocks move swiftly from allocation to production.
