The center plans strict timetable for penalties for miners to ensure critical mineral safety

In 2025, the Second Amendment Rules for Minerals (Auctions) include provisions for imposing fines, as a percentage of performance guarantees, which are granted by successful bidders to the government to postpone exploration activities until four months after the contract is signed.

The aim is to accelerate the production of mineral blocks to fully meet domestic demand, especially for key and heavy earth elements such as lithium, nickel, cobalt, silicon, copper, which is crucial for solar panels, wind turbines, electric vehicles and energy storage systems.

India depends on the import of the most critical minerals. According to the Ministry of Commerce, India imported 32,300 tons of four key minerals in fiscal year 23: lithium, copper ore and concentrate, cobalt and nickel value ₹6.55 billion. Among them, the country’s copper ore and concentrate imports depend on 93%, while the other three countries are 100%.

“The introduction of a timeline is a step towards ensuring that mineral resources are brought into production in a timely manner. The reason for this move is to prevent locking down mineral resources, which would otherwise not be on the planet, rather than economically used.”

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“With that being said, even without financial restrictions, the time frame for the development lease can be affected by location-specific factors such as environmental issues, evacuation and logistics infrastructure,” Gupta said. “The development schedules therefore vary by location, so those schedules must be considered.”

The first exploration and mining of the 1957 Resources of Crisis and Heavy Mines was conducted last year.

India has launched the National Critical Mineral Mission (NCMM) to ensure its long-term availability and handling. To enable the project to quickly address the country’s shortage of these critical minerals, it plans to introduce a strict timeline.

Penalties for delays

Under the provisions added to the Second Amendment Rules for Mining (Auction) 2025 Minerals (Auction) Rules, the winner of the mining lease will start four months from the date of issuance of a Letter of Intent (LOI) to submit a mining plan for approval. In the event of any delays after this period, miners will face a fine of 5% equivalent to the 5% guaranteed performance guarantee security to be allocated. After six months, a 2% deduction will be deducted for each month. In mining activities, this will be considered a milestone 1.

Performance safety is the percentage of the estimated resource value of minerals and was successfully bid by the state government.

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The Ministry of Mines has sought comments from stakeholders in accordance with the draft rules at the end of the month.

These draft amendments are based on the recommendations of the committee composed of the Ministry. The group includes representatives from the Ministry of Mining and Environment, the Ministry of Forests and Climate Change, in addition to the state governments of Odisha, Karnataka and Madhya Pradesh, and the Indian Mining Authority.

Environment nod timetable

The draft rules also provide a separate timeline for ensuring projects and implementing environmental permits for mining leases. A similar plan was also considered for the holders of composite mineral leases, which was first granted last year after the Mining Act was amended.

According to the Draft Rules, a delay of more than 18 months from completion of Milestone 1 will attract a performance safety deduction of 5%, while a DELA extension of more than 22 months after 2% per month. This will be the second milestone.

A delay of 11 months, but a delay of less than 14 months from Milestone 2 will be deducted again by 5% performance safety; over a 14-month period, a 2% fee will be charged for each month.

Mileage 3 will require miners to complete the acquisition of land and obtain a license to grant water and electricity as part of the execution of the mineral lease.

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A similar timeline is provided for winners of the first-issued compound permits in the country and will involve exploration of resources and mining. However, the proposed regulations divide the timeline of compound permits into six milestones, spreading over 81 months (6 years and 9 months).

The draft also suggests that if priority bidders or successful bidders are clearly identified at various stages of mining, the state will perform safely in accordance with the regulations. Successful bidders will strengthen performance safety within two months of this grant.

Rajib Maitra, a partner at Deloitte India, said the new regulations on auctions will help open mines and boost production given the increased demand in the end-use sector, especially in key minerals. “This will inspire mining activities in the country.”

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