The Ministry of Mines has rolled out new intermediary timelines for all mining projects between the issuance of a Letter of Intent (LoI) and the execution of a mining lease, aiming to fast-track operationalisation of auctioned mineral blocks. The amendments to the Mineral (Auction) Rules, 2015, effective from 17th October 2025, introduce a structured system to monitor progress, set clear deadlines, and impose reasonable penalties for delays while offering incentives for early production.
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New Rules Bring Accountability and Incentives
Until now, the mining sector operated under a broad three-year window, extendable by two years for lease execution without any intermediate checks. The new framework fills this gap by defining stage wise milestones. Delays in meeting these stages will invite proportional penalties, capped at 1% of the bidder’s bank guarantee for each month of delay. However, if the final milestone is met on time, earlier penalties can be offset against the auction premium. The policy’s core focus is on timely project completion rather than punitive recovery.
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Encouragement for Early Mining and State Oversight
To promote faster development, the Centre has also built in incentives: only 50% of the auction premium will be charged for minerals dispatched within five years of LoI issuance under a Mining Lease, and within seven years for a Composite Licence. A state level committee headed by the Director of Mines and Geology will now evaluate all cases of delay, ensuring that penalties are imposed only when the bidder is responsible.
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Retrospective Application and Implementation
The new timelines are also applicable to mining blocks already auctioned. Preferred bidders must now submit performance security within six months of the amendment’s commencement. For cases where states delay issuing the LoI beyond 30 days, the second instalment of the upfront payment will be reduced by 5% per month of delay shifting part of the accountability to state authorities as well.
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Mining Auctions See Accelerated Momentum
Since the introduction of the auction regime in 2015, India has auctioned 585 major mineral blocks, including 34 critical mineral blocks by the Centre. While initial progress was slow, the pace has improved dramatically in the past three years, averaging over 100 successful auctions annually. In the first seven months of the current year alone, 112 mineral blocks have been auctioned.
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