A mining lease passes to a buyer under section 12A with State approval and no transfer charge, while royalty, District Mineral Foundation, Trust and premium payments continue

A mining lease in India goes to a person selected under section 10(4) of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act): by auction under section 10B for a notified mineral such as iron ore, or by the routes in sections 10BA, 11, 11A, 11B and 11D, a reservation under section 17A or the Coal Mines (Special Provisions) Act, 2015. It runs for fifty years under section 8A and passes to a buyer under section 12A with the previous approval of the State Government, taken to have no objection if it conveys no decision in ninety days, and with no transfer charge since 28 March 2021. The payments continue: royalty or dead rent, whichever is greater, ten per cent of royalty to the District Mineral Foundation (DMF) for a lease granted on or after 12 January 2015, three per cent to the National Mineral Exploration and Development Trust (NMEDT) since 1 September 2025, and the auction premium. The lease lapses under section 4A(4) after two years without production and dispatch, and a refusal goes in revision to the Central Government under section 30 of the Act and rules 35 and 36 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016.

How is a lease for a major mineral granted?

Section 10(4) bars an application for a mineral concession from anyone not selected under section 10B, 10BA, 11, 11A, 11B or 11D, under the Coal Mines (Special Provisions) Act, 2015, or by a reservation under section 17A. Section 10B covers notified minerals: the State notifies an area and selects the lessee through competitive auction, including e-auction. If the State does not complete the auction, the Central Government may require it to do so within a period fixed with it and conduct the auction itself after that period (proviso to section 10B(4)).

The Mineral (Auction) Rules, 2015 are read here as consolidated to 29 January 2026; the Mineral (Auction) Second Amendment Rules, 2026 (G.S.R. 223(E), 30 March 2026) were not read. Under rule 8 the bidder quotes a percentage, at or above the reserve price, of the value of mineral despatched, being despatch multiplied by the sale price the Indian Bureau of Mines (IBM) publishes for the month. It is paid monthly and is called here the auction premium. Rule 11 adds an upfront payment of 0.50 per cent of the value of estimated resources, in three instalments, adjusted against the premium once production begins. The lease starts when the deed is registered (rule 10(9)).

For how long does the lease run?

Section 8A(2) makes every lease granted on or after 12 January 2015 a lease for fifty years,. Under section 8A(4) the lease goes to auction on expiry.

What does section 12A allow, and what does the buyer not pay?

Section 12A(2) lets the holder of a mining lease granted in accordance with the procedure in the Act transfer it, with the previous approval of the State Government, to a person eligible to hold it. Before 28 March 2021 sub-section (6) charged for transfer. The Mines and Minerals (Development and Regulation) Amendment Act, 2021 (Act 16 of 2021) widened the words from that date, and the proviso to sub-section (2) frees the transferee of that charge, with no refund of what was paid. The transfer deed must be registered (rule 23(7)), so stamp duty and registration fees under State law still apply.

The application states the consideration (section 12A(3), rule 23(3)). If the State conveys no approval within ninety days, it is construed to have no objection. It may disapprove only for ineligibility, and no transfer may breach a grant condition (section 12A(4)). Section 8B, which carries clearances to a new lessee, reaches only a lessee selected by auction after the earlier lease ends; a buyer under section 12A takes clearances by transfer under the laws that granted them.

How does the transfer run under the Concession Rules?

Rule 23 of the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016, as amended up to 30 March 2026, supplies the steps. Seller and buyer jointly apply in Schedule IX, and the State decides within ninety days; silence is no objection (rule 23(4)). They then submit a registered deed in Schedule X within thirty days, failing which the application becomes ineligible (rule 23(7) and (8)). A transfer must not turn a captive mine into a merchant mine or the reverse (rule 23(5)).

What is the position of a lease that was not auctioned?

A lease granted before 12 January 2015 for captive use and extended under section 8A(5) to 31 March 2030, or a Government company's lease under section 8A(8), is a non-auctioned lease. Non-captive leases extended under section 8A(6) ended on 31 March 2020. Section 12A(2) is no longer confined to auctioned leases. The Minerals (Transfer of Mining Lease Granted Otherwise than through Auction for Captive Purpose) Rules, 2016 were rescinded, and rule 23(12) refunds upfront payments made under them within sixty days of an application.

Which payments continue after the transfer?

Royalty on mineral removed or consumed is at the Second Schedule rate (section 9): for iron ore, fifteen per cent of average sale price. Dead rent under section 9A and the Third Schedule is payable each year, and the lessee pays whichever of it and royalty is greater.

Section 9B(5) caps the DMF payment on a lease granted on or after 12 January 2015 at one-third of royalty. The Mines and Minerals (Contribution to District Mineral Foundation) Rules, 2015 set ten per cent for such leases and thirty per cent for earlier ones and for leases under section 10A(2); as printed, rule 2 names coal, lignite and sand for stowing, so its reach to iron ore is open. Section 9C(4), as amended by the Mines and Minerals (Development and Regulation) Amendment Act, 2025 (Act 28 of 2025) from 1 September 2025, requires three per cent of royalty for the Trust, which took two per cent before.

The 2021 Act brought the captive-use change: section 8A(7A) lets a captive lessee sell mineral after meeting the end-use plant's needs, on paying the Sixth Schedule additional amount, and Act 28 of 2025 omitted the fifty per cent cap. For a non-auctioned captive iron ore mine it is two hundred and fifty per cent of royalty on lumps, run-of-mine ore and concentrates and one hundred and fifty per cent on fines. For an auctioned captive mine it is nil up to twenty-five per cent of annual production and fifty per cent of royalty up to fifty per cent.

What security stands behind the lease?

Rule 12(1) of the Auction Rules requires the preferred bidder to provide performance security of 0.50 per cent of the value of estimated resources, readjusted every five years. For a notice inviting tender issued after the commencement of the Mineral (Auction) Amendment Rules, 2024 (G.S.R. 49(E), 21 January 2024), the security and the upfront payment cannot each exceed INR 500 crore. Rule 10A lets the State appropriate part of it for a bidder's delay in a Schedule VI milestone. Rule 23 does not mention fresh security on transfer.

When does the lease lapse for non-operation?

Under section 4A(4) a lease lapses if its holder does not undertake production and dispatch for two years from execution, or, having begun, discontinues them for two years. On an application made before the lapse, the State may extend the two years by up to one year if the failure is beyond the holder's control, once only in the life of the lease.

Where does a refusal go?

Section 30 of the Act lets the Central Government revise an order of a State Government on a mineral other than a minor mineral, on an aggrieved party's application, and act where the State has made no order in time. Rules 35 and 36 of the Concession Rules supply the procedure. The application, in Schedule XI with a fee of INR 10,000, is due within three months of communication of the order to the applicant, or of the day the time to pass it expired; a late one is entertained on sufficient cause. The Central Government may confirm, modify, set aside or stay the order; it is a revision, not an appeal.

What does the arithmetic look like?

An illustration. The figures and dates are hypothetical. Tax is left out, the IBM price equals the sale price, royalty exceeds dead rent, and the rule 13(2) rebate (half the premium for five years from the letter of intent, where mineral contents were established under the Evidence Rules) is taken not to apply.

Auctioned iron ore (lumps) lease, not captive; deed registered
1 April 2027; premium bid 20 per cent of value despatched

Despatch 2,000,000 tonnes a year at INR 5,000 per tonne
  Value of mineral despatched                 INR 1,000 crore
  Royalty, 15 per cent                        INR 150 crore
  DMF, 10 per cent of royalty                 INR 15 crore
  NMEDT, 3 per cent of royalty                INR 4.50 crore
  Auction premium, 20 per cent                INR 200 crore
  Paid each year                              INR 369.50 crore

Performance security
  100 million tonnes at INR 4,000             INR 40,000 crore
  0.50 per cent of that                       INR 200 crore

Transfer and the section 4A(4) clock
  Despatch stops                              1 October 2028
  Joint transfer application                  15 January 2029
  No objection if the State is silent         15 April 2029
  Registered deed due by                      15 May 2029
  Lapse after two years of no despatch        1 October 2030
  With the one-year extension                 1 October 2031

The price paid to the seller is not shown, though the transfer application states it. On the reading that a transfer does not reset the section 4A(4) clock, the clock started when the seller stopped, so a deed registered on 15 May 2029 leaves about sixteen and a half months before the lapse.

What remains unsettled?

Whether the section 4A(4) clock restarts on transfer. Neither section 12A nor rule 23 resets the date of execution or of discontinuance.

Whether the seller's security stays with the lease. Rule 12 binds the preferred bidder, and rule 23 is silent.

How far the State may refuse. Rule 23(4) speaks of rejection for reasons recorded, whereas section 12A(4) confines disapproval to ineligibility.

How the Sixth Schedule reads above fifty per cent of annual production, which section 8A(7A) no longer caps, and whether its fifty per cent of royalty falls on all tonnage sold.

Whether the Amendment Bill, 2026, passed by both Houses on 12 and 13 August 2026, has received assent and come into force. Its proposed section 9D would bar a State levy on mineral rights except on conditions the Central Government prescribes; the consolidated Act to 20 November 2025 does not carry it.