The central government, under the leadership of Prime Minister Narendra Modi, has temporarily halted the auction process for the Nayakkarpatti Tungsten Block in Tamil Nadu. This decision follows representations highlighting the presence of a biodiversity heritage site within the block’s area.
The Geological Survey of India (GSI) has been directed to re-examine and potentially redefine the block’s boundaries to exclude the biodiversity-sensitive zones. Additionally, the Tamil Nadu government has been requested to hold off on issuing the Letter of Intent (LOI) to the preferred bidder, Hindustan Zinc Ltd., until the review is completed.
Timeline Of Events
The Geological Survey of India (GSI) transferred the Geological Memorandum (GM) for tungsten deposits in Melur–Terkutteru–Muthuvelpatti areas, Madurai district, to the Tamil Nadu government on 14 September 2021. At that time, the state government held the authority to auction major minerals, including critical minerals like tungsten.
In August 2023, the Mines and Minerals (Development and Regulation) Act, 1957, was amended by the Mines and Minerals (Development and Regulation) Amendment Act, 2023. This amendment, effective from 17 August 2023, introduced Section 11D, granting exclusive rights to the Central Government for auctioning mining leases and composite licenses of critical and strategic minerals listed in Part D of the First Schedule, including tungsten.
Political Blame Game
Following this amendment, the Ministry of Mines notified Tamil Nadu on 15 September 2023, about the planned auction of critical mineral blocks, including the Nayakkarpatti Tungsten Block. In response, the Tamil Nadu Water Resources Minister raised concerns in a letter dated 3 October 2023, questioning the amendment and requesting that state governments retain auction rights over critical minerals. Notably, Tamil Nadu had not conducted any mineral auctions during the period (2021–2023) when it had the authority to do so, nor in the preceding nine years under the auction regime. The Ministry of Mines clarified to the Tamil Nadu government that auctions would proceed as per the amended law.
On 6 December 2023, the Secretary of the Ministry of Mines requested details of three critical mineral blocks, including Nayakkarpatti, for auction. The Tamil Nadu Commissioner of Geology and Mining provided this information on 8 February 2024, acknowledging the presence of a biodiversity heritage site covering approximately 10% of the Nayakkarpatti block’s area but not opposing the auction.
The Nayakkarpatti Tungsten Block, covering 20.16 sq. km, was offered for auction as a Composite Licence (CL) in February 2024 and re-notified in June 2024 after the first attempt. Hindustan Zinc Ltd. emerged as the preferred bidder in November 2024. Despite the biodiversity concerns, Tamil Nadu raised no formal objections during multiple auction-related meetings between February and November 2024.
A Composite Licence entails a two-stage process: prospecting followed by mining. The license holder must first explore and delineate a mineralized zone and then obtain requisite environmental and government clearances before transitioning to mining. Sensitive areas like biodiversity sites are typically excluded during this clearance process, a right retained by the state government.
The Ministry of Mines limits its role to auctioning critical minerals to promote economic development. Subsequent processes, such as issuing the Letter of Intent (LOI) and granting mining leases, fall under state jurisdiction. Revenue generated from production benefits the state.
However, following concerns raised about the biodiversity heritage site within the Nayakkarpatti block, the GSI has been tasked with re-examining the block’s boundaries to exclude sensitive areas. The Tamil Nadu government has been requested to temporarily withhold issuing the LOI to the preferred bidder pending this review.
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