The Mineral (Auction) Rules, 2015

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Dated: 15.04.2026

The Mineral (Auction) Rules, 2015

The Mineral (Auction) Rules, 2015, as amended up to January 29, 2026, are a cornerstone of India’s mineral resource management. These rules, issued by the Ministry of Mines, Government of India, establish the framework for transparent, competitive, and efficient auctions of mineral concessions, including mining leases, composite licences, and exploration licences. This article provides a detailed overview of the rules, their structure, key processes, eligibility criteria, and recent amendments, making it a valuable resource for industry stakeholders, policymakers, and the public.

Background and Purpose

The rules were formulated under the Mines and Minerals (Development and Regulation) Act, 1957, to ensure that mineral resources are allocated through fair and competitive auctions. The aim is to maximize revenue for the state, promote responsible mining, and encourage investment in mineral exploration and development.

Scope and Applicability

The Mineral (Auction) Rules, 2015 apply to all minerals except:

Minor minerals specified under clause (e) of section 3
Minerals in Part A and Part B of the First Schedule to the Act (including atomic minerals above threshold values)

Key Definitions

Auction Premium: Amount payable by the lessee as per rule 13(2)
Mine Development and Production Agreement: Agreement between the state and successful bidder
Preferred Bidder: Highest bidder in the auction process
Reserve Price: Minimum percentage of the value of mineral despatched
Upfront Payment: Payment made by the preferred bidder before lease grant
Value of Estimated Resources: Calculated based on estimated mineral quantity and average price published by the Indian Bureau of Mines

Auction Process Overview

1. Mining Lease Auction

Prerequisites: Mineral contents must be established as per the Minerals (Evidence of Mineral Contents) Rules, 2015
Demarcation: State government must identify and classify land using advanced surveying methods
Eligibility: Net worth requirements based on estimated resource value; no reservation for captive use
Electronic Auction: Conducted online, ensuring transparency and security
Bidding Parameters: Bidders quote a percentage of the value of mineral despatched (reserve price is the minimum)
Two-Round Process: Technical qualification followed by financial bidding
Payments: Upfront payment (0.5% of estimated resource value, capped at Rs. 500 crore), performance security, royalties, and monthly payments

2. Composite Licence Auction

Prerequisites: Requirements of rule 7 of the Minerals (Evidence of Mineral Contents) Rules, 2015 must be satisfied
Process: Similar to mining lease auction, but includes prospecting and mining rights
Performance Security: 0.25% of estimated resource value, revised to 0.5% before mining lease grant
Timelines: Strict milestones for operationalisation, with penalties for delays

3. Exploration Licence Auction

Applicable Minerals: Minerals specified in the Seventh Schedule of the Act
Process: Reverse auction (lowest percentage share of future auction premium wins)
Eligibility: Net worth of at least Rs. 25 crore
Performance Security: Rs. 1 crore to Rs. 2 crore depending on area size
Payments: Exploration licencee receives a share of auction premium from future mining lease

Timelines and Penalties

Strict timelines are set for each milestone in the operationalisation of mineral blocks. Delays result in appropriation of performance security, incentivizing timely compliance. For example:

Approval of mining plan: within 6 months
Environment clearance: within 18 months
Execution of mining lease: within 12 months

Recent Amendments and Innovations

Insurance Surety Bonds: Accepted as performance security, expanding options beyond bank guarantees
Capped Payments: Upfront and performance security payments are capped to encourage wider participation
Online Platforms: Auctions must use certified e-procurement systems
Transparency: All auction details, including bidder identities and offers, are made public during the process

Special Provisions

Atomic Minerals: Special reporting and licensing requirements for discovery of atomic minerals
Minor Minerals: Managed under separate state rules
Exploration Obligations: Mining lease holders must complete detailed exploration within five years

Sample Implementation: Mining Lease Auction

State government identifies and demarcates mineral block
Issues notice inviting tender with geological report and land classification
Bidders submit technical and financial bids online
Top bidders qualify for second round; highest bidder becomes preferred bidder
Preferred bidder pays upfront payment and performance security
State issues letter of intent; successful bidder signs Mine Development and Production Agreement
Mining lease deed executed and registered

Conclusion

The Mineral (Auction) Rules, 2015, with their amendments, have transformed mineral resource allocation in India. By mandating transparent, competitive, and technologically advanced auctions, the rules foster responsible mining, maximize state revenue, and encourage investment. Stakeholders must stay updated with amendments and comply with timelines to avoid penalties and ensure smooth operations.

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Source: Ministry of Mines

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