Auction of Tungsten Block in Tamil Nadu
The Geological Survey of India (GSI) has recently made significant strides in the auctioning of critical minerals in Tamil Nadu. On September 14, 2021, the GSI handed over the Geological Memorandum (GM) for tungsten in the Melur-Terkutteru-Muthuvelpatti areas of Madurai District to the Tamil Nadu State Government. This transfer of authority was crucial, as it allowed the state government to auction major minerals, including critical ones like tungsten. However, the landscape changed with the amendment of the Mines and Minerals (Development and Regulation) Act in 2023, which shifted the auctioning power to the Central Government. This article explores the implications of these changes and the ongoing auction process for the Nayakkarpatti Tungsten Block.
Changes in Mining Regulations
The Mines and Minerals (Development and Regulation) Act, originally enacted in 1957, underwent significant amendments on August 17, 2023. The new amendment introduced Section 11D, which empowers the Central Government to auction mining leases and composite licenses for critical and strategic minerals. Tungsten is classified as one of these critical minerals. Following this amendment, the Ministry of Mines reached out to the Tamil Nadu government on September 15, 2023, regarding the auction of critical mineral blocks, including the Nayakkarpatti Tungsten Block.
In response, the Water Resource Minister of Tamil Nadu raised concerns about the amendment. He argued that the power to auction critical minerals should remain with the state governments. It is important to note that during the period from 2021 to 2023, when the state had the authority to auction critical minerals, Tamil Nadu did not conduct any auctions. In fact, the state has not auctioned a single major mineral block in the last nine years. This lack of action raises questions about the state’s commitment to mineral development and resource management.
The Auction Process for Nayakkarpatti Tungsten Block
Despite the initial resistance from the Tamil Nadu government, the Ministry of Mines proceeded with the auction process for the Nayakkarpatti Tungsten Block. On December 6, 2023, the Secretary of the Ministry of Mines requested details from the Chief Secretary of Tamil Nadu regarding three critical mineral blocks, including Nayakkarpatti. The Commissioner of Geology and Mining in Tamil Nadu provided the necessary information on February 8, 2024. Although the state government acknowledged the presence of a biodiversity site within the block, it did not formally oppose the auction.
The Nayakkarpatti Tungsten Block, covering an area of over 20.16 square kilometers, was proposed for auction as a Composite License (CL) in February 2024. The auction was re-notified in June 2024 and successfully concluded on November 7, 2024, with Hindustan Zinc Ltd. declared as the preferred bidder. Notably, throughout the auction process, the Tamil Nadu government did not raise any objections or concerns, despite attending multiple meetings related to the auction.
Understanding Composite Licenses and Their Implications
A Composite License (CL) is a two-stage concession that combines a prospecting license with a mining lease. This license requires the holder to first conduct prospecting operations to explore the mineral content in a defined area. The process begins with a larger area based on preliminary geological surveys and narrows down to a smaller, mineralized zone for mining. Before a mining lease is granted, the license holder must obtain several clearances from various agencies, including the Ministry of Environment, Forest and Climate Change (MoEF&CC) and the State Government. This ensures that eco-sensitive zones and biodiversity areas are considered during the exploration stage.
The role of the Ministry of Mines is primarily focused on the auctioning of critical minerals to promote economic development. Once the auction is completed, the issuance of the Letter of Intent (LOI) and the signing of the Composite License and Mining Lease falls under the jurisdiction of the State Government. If necessary, the area can be modified before these agreements are finalized. Importantly, once production begins, all revenue generated from the mining operations is directed to the State Government.
Concerns Over Biodiversity and Future Steps
Following the declaration of Hindustan Zinc Ltd. as the preferred bidder for the Nayakkarpatti Tungsten Block, several representations were made against the auction. Critics raised concerns about the presence of a biodiversity heritage site within the block area. In response, the GSI has been asked to re-examine the block and consider redefining its boundaries to exclude the biodiversity site. Additionally, the Tamil Nadu government has been requested to temporarily halt the process of issuing the Letter of Intent to the preferred bidder.
This situation highlights the ongoing tension between mineral development and environmental conservation. As the auction process unfolds, it remains to be seen how the government will balance economic interests with the need to protect sensitive ecological areas. The outcome of this auction and the future of critical mineral mining in Tamil Nadu will be closely monitored by stakeholders across the region.
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