UPSC Prelims Practice Questions — Ministry of Mines Launches the Ninth Tranche of Critical Mineral Block Auction and the Third Tranche of Exploration Licence Auction; Unveils Landmark Reform

Q1. With reference to the auction of critical mineral concessions in India under the MMDR framework, consider the following statements: Which of the statements given above is/are correct?

  1. In the auction of a Mining Lease or Composite Licence for a critical mineral block, the block goes to the bidder quoting the highest percentage of revenue share.
  2. In the auction of an Exploration Licence, the block goes to the bidder seeking the highest share of the payments of the future mining lessee, as this signals the greatest confidence in the block.
  3. In both kinds of auction, the process runs in two stages, and only bidders who qualify technically in the first stage go on to the e-auction.
  • A. 1, 2 and 3
  • B. 1 and 2 only
  • C. 1 and 3 only
  • D. 2 only

Q2. Critical mineral blocks for mining are sold through a forward auction, while Exploration Licence blocks are awarded through a reverse auction. Which one of the following best explains why the Exploration Licence is awarded through a reverse auction?

  • A. The Centre and not the State is the seller of this licence, so the lowest bid is chosen to protect the Union's share of mineral revenue
  • B. The State is in effect paying the licensee for bearing discovery risk, so the bidder asking for the smallest reward is preferred
  • C. The minerals lie deep and their value is uncertain, so the bidder quoting the smallest exploration budget is preferred to save public money
  • D. The licensee gets a right to extract and sell the mineral, so the State prefers the bidder asking the lowest royalty to draw in investment

Q3. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. A private agency holding an Exploration Licence under the MMDR Act can earn a return on a successful discovery even though it does not acquire the right to mine the block.
  2. The block explored under an Exploration Licence is later auctioned for mining, and the licence holder receives a share of the payments made by the successful mining lessee.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q4. With reference to the Exploration Licence introduced by the 2023 amendment to the Mines and Minerals (Development and Regulation) Act, consider the following statements: Which of the statements given above is/are correct?

  1. An Exploration Licence can be obtained for any mineral listed in the First Schedule to the Act.
  2. The licence is meant to bring private capital and technology into the reconnaissance and prospecting stage, before any mining lease exists for the area.
  3. The licence is granted by the State Government, though the Central Government prescribes by rules how it is to be auctioned.
  • A. 1 and 2 only
  • B. 1 and 3 only
  • C. 2 only
  • D. 2 and 3 only

Q5. Consider the following statements: Which of the following is correct in respect of the above statements?

  1. Because the Central Government conducts the auction of Part D critical mineral blocks, the auction premium from these blocks accrues to the Union Government.
  2. Parliament may regulate mines and mineral development under Entry 54 of the Union List only to the extent it declares by law that Union control is expedient in the public interest.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q6. The Mineral (Auction) Third Amendment Rules, 2026 reduce, for Part D minerals, the minimum number of technically qualified bidders needed for an auction to proceed in the second round from three to two. Consider the following as possible consequences of this change: Which of the statements given above is/are correct?

  1. Fewer Part D blocks would fail to proceed in the second round for want of enough qualified bidders.
  2. A block that proceeds with two qualified bidders faces a thinner field of competition than the earlier rule required.
  3. The change replaces competitive bidding for such blocks with negotiated allotment to a single qualified bidder.
  4. The change does not alter the rule that a critical mineral block goes to the bidder quoting the highest revenue share.
  • A. 1, 2 and 4 only
  • B. 2, 3 and 4 only
  • C. 1, 3 and 4 only
  • D. 1 and 2 only

Q7. Consider the following assertion: 'The present system of allocating mineral concessions in India narrows the scope for discretion by officials in choosing who gets a block.' Consider the following statements: Which of the statements given above support/supports the assertion?

  1. Since the 2015 amendment to the MMDR Act, auction has been the only route for granting mineral concessions.
  2. Letters of Intent to winning bidders are generated automatically through the Unified Mining Portal after the auction.
  3. Bids are placed on an online e-auction platform, and the winner is picked on a pre-declared bid parameter.
  4. Royalty and auction premium from mineral concessions accrue to the State Governments.
  • A. 2, 3 and 4 only
  • B. 1, 2, 3 and 4
  • C. 1 and 2 only
  • D. 1, 2 and 3 only