Page 17 - Mines and Minerals Reporter eMagazine - Volume October 2021

INDUSTRY ANALYSIS

feasible to estimate the quantities of deep-seated minerals
in the same vein as bulk minerals, without exploration using
ore-specific geological expertise. This is evident from the fact
that there have been very few auctions of these minerals and
from the limited number of deep-seated mineral discoveries
in India.
7. Moreover, many of these minerals are critical for manufac-
turing clean energy technologies, electronics, and national
security applications. Therefore, the process of allocation of
mineral rights must be sensitive to incentivising exploration—
including the right to mine, which is prevalent in many other
mining jurisdictions.
8. Some thought may be given to honing the existing auctions
system to achieve a more efficient mineral allocation regime:
a. This includes placing multiple min-
eral blocks on auction under a pre-an-
nounced auctions calendar.
b. It may also help to change the auc-
tions from a two-stage to a single-stage
system.
c. Additionally, the ascending forward
bidding process may be changed to a
single sealed bid. These changes would
help reduce the scarcity mindset, as
miners will know when more miner-
al blocks will be up for auction, and,
therefore, it would not encourage com-
petitive overbidding.
9. Finally, there must be a relook at the
two mineral taxation systems current-
ly in place—royalties and auctions—as
past baggage is being carried forward in
a new regime. Paul Milgrom and Robert
Wilson, both of Stanford University, won the Nobel Prize in
2020 for their pioneering theoretical work on how auctions
work, and for their insights on how to innovate auction for-
mats for selling goods and services that are not amenable to
efficient sale in a traditional manner (The Nobel Prize, 2020).
It would be worthwhile to imbibe learnings from their work to
further improve the auctions system in India.

CSEP researchers work across domains including,
but not limited to, Growth, Finance & Develop-
ment; Energy, Natural Resources and Sustainabil-
ity; and Foreign Policy and Security. All research
and policy recommendations are freely available
to the public. CSEP is based in New Delhi and
registered as a company limited by shares and not
for profit, under Section 8 of the Companies Act,
1956.

OCTOBER 2021 / MINES & MINERALS REPORTER 15