KOLKATA (miningweekly.com) – Provincial authorities in India are struggling to auction off mineral blocks.

A senior Mines Ministry official said a series of meetings with provincial governments over the past two months had revealed that provincial governments were seriously hamstrung by a lack of technical manpower and organisational capabilities in the auctioning of identified mineral blocks, let alone blocks where mineable reserves were yet to be estimated.

Initiating a “hand-holding” initiative, the Ministry has asked State-owned engineering consultancy firm Mecon to provide authorities with support in terms of documentation and paperwork related to the auction process. Other government arms like trading firm MSTC Limited and Mineral Exploration Corporation Limited (MECL) would extend their own manpower and support in establishing e-auction platforms at the provincial levels, the official said.

He conceded that while the federal government had been keen to get the auction process rolling by the end of December, the lack of preparedness would possibly push it back to next year. He would, however, not be drawn on an exact deadline.

The federal government earlier this year amended the mining legislation through the Mines, Minerals Development and Regulation (MMDR) Act, making auction mandatory for the allocation of all mineral blocks. The provincial governments had been mandated to conduct auctions for mineral blocks in their respective geographies but subject to rules and regulations laid down by the federal government under the MMDR Act.

In the first lot, the Mines Ministry had targeted putting 83 mineral blocks, including iron-ore, bauxite and limestone, up for auction around November/December and was holding weekly meetings with representatives of provincial governments.

However, the lack of manpower and organisational wherewithal from the provincial governments was exacerbated by an uncertain response from prospective bidders and valuations that could be achieved through the price discovery mechanism, given the current downturn in the mining industry and the slump in global commodity prices.

It has been pointed out by the provinces that the uncertainties facing the domestic and global mining industry also had an effect on the local authorities, which were struggling to ascertain a fair valuation on which a base price would be set for the bidding process.

It was against this backdrop that Steel and Mines Minister Narendra Singh Tomar during his Australian visit earlier this month, made a strong pitch seeking assistance from the Australian government to convince global mining majors such as Rio Tinto, BHP Billiton and Vale to head towards India and participate in the auctions, the official said.

Not only would participation by global resource majors buoy sentiments among prospective investors, it would also contribute to enhancing knowledge and best practice domains at the grass-roots level, he added.