Punjab Launches Mining Auctions, Overhauls Mineral Rules

Mining and Geology Minister Barinder Kumar Goyal said the government was committed to ending opacity in the sector and ensuring that natural resources are used for public benefit. He said the shift to transparent online auctions would protect state revenue, create a level playing field for genuine operators and curb illegal mining.

In Phase I, the government auctioned 29 new Commercial Mining Sites through an open and competitive online bidding process. The auctions, floated between October and November, resulted in 16 successful bids and generated Rs 116.1 million in revenue. These are the first mining auctions conducted by the state in the past three years.

The cabinet-approved reforms mark a clear departure from the earlier volume-based auction system, where bidders competed by offering to operationalise the maximum share of a site. In many cases, bidders quoted identical volumes, often 100 per cent, leading to selection through draw of lots. Over time, this system led to lower revenue realisation, an increase in non-serious bidders, limited investment commitment and delays in making mines operational, as environmental clearances were the government’s responsibility.

To address these shortcomings, auctions will now be conducted through competitive price bidding to ensure fair allocation and improved revenue outcomes. Bidders will be required to make upfront payments to demonstrate seriousness, while royalty payments will be collected in advance to ensure steady revenue flows.

Responsibility for obtaining environmental clearances has been shifted to bidders, a move expected to significantly reduce delays in operationalising mines. Clear dead rent provisions have also been introduced to prevent speculative bidding by ensuring minimum payments even if mines are not made operational. In addition, lease tenures have been extended from three years to five years, providing greater stability and planning certainty to operators.

The government said that while 29 sites have been auctioned in the first phase, nearly 100 additional sites will be brought to auction in staggered phases. These reforms are expected to expand the legal supply of raw materials, accelerate project timelines, strengthen regulatory clarity and significantly increase government revenues.

The state government said the combined impact of policy amendments, auction reforms and related measures represents a comprehensive overhaul of Punjab’s mining sector, aimed at eliminating opacity, preventing monopoly, curbing illegal mining and ensuring optimal use of natural resources for public benefit.