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RSTV: THE BIG PICTURE- MINES & MINERALS AMENDMENT BILL

RSTV


Introduction:

The The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 was passed. The Bill is aimed at bringing more transparency in the auction process and also to boost employment in the sector. Union mines minister Pralhad Joshi claimed that 55 lakh direct and indirect employment would be generated due to the reforms. The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 amends the Mines and Minerals (Development and Regulation) Act, 1957, which regulates the mining sector in India.

India Mines and Minerals Market:

  • India is the third largest producer of coal. Coal production in the country stood at 688.8 million tonnes in FY18. India’s coal production in FY19 to reach 739.36 million tonnes.
  • India ranks fourth in terms of iron ore production globally. Production of iron ore in FY19 (up to Feb 19) stood at 187.60 million tonnes. India has around eight per cent of world’s deposits of iron ore.
  • India became the world second largest crude steel producer in 2018 with output 106.5 million tonnes.
  • According to Ministry of Mines, India has the 7th largest bauxite reserves – around 2,908.85 million tonnes in FY18.
  • Aluminium production stood at 2.25 MT in FY19 (up to February 2019).

Amendments brought in:

The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957.  The Act regulates the mining sector in India.

  • Removal of restriction on end-use of minerals: The Act empowers the central government to reserve any mine (other than coal, lignite, and atomic minerals) to be leased through an auction for a particular end-use (such as iron ore mine for a steel plant).  Such mines are known as captive mines.  The Bill provides that no mine will be reserved for particular end-use.
  • Sale of minerals by captive mines:  The Bill provides that captive mines (other than atomic minerals) may sell up to 50% of their annual mineral production in the open market after meeting their own needs.   The central government may increase this threshold through a notification.  The lessee will have to pay additional charges for mineral sold in the open market.
  • Auction by the central government in certain cases: Under the Act, states conduct the auction of mineral concessions (other than coal, lignite, and atomic minerals).  Mineral concessions include mining lease and prospecting license-cum-mining lease.  The Bill empowers the central government to specify a time period for completion of the auction process in consultation with the state government.  If the state government is unable to complete the auction process within this period, the auctions may be conducted by the central government.
  • Transfer of statutory clearances: Upon expiry of a mining lease (other than coal, lignite, and atomic minerals), mines are leased to new persons through auction.  The statutory clearances issued to the previous lessee are transferred to the new lessee for a period of two years.  The new lessee is required to obtain fresh clearances within these two years.  The Bill replaces this provision and instead provides that transferred statutory clearances will be valid throughout the lease period of the new lessee.
  • Allocation of mines with expired leases: The Bill adds that mines (other than coal, lignite, and atomic minerals), whose lease has expired, may be allocated to a government company in certain cases.  This will be applicable if the auction process for granting a new lease has not been completed, or the new lease has been terminated within a year of the auction.  The state government may grant a lease for such a mine to a government company for a period of up to 10 years or until the selection of a new lessee, whichever is earlier.
  • Rights of certain existing concession holders: In 2015, the Act was amended to provide that mines will be leased through an auction process.  Existing concession holders and applicants have been provided with certain rights including: (i) right to obtain prospecting licence or mining lease to a holder of reconnaissance permit or prospecting licence (issued before commencement of the 2015 Amendment Act), and (ii) right for grant of mining lease where the central government had given its approval or letter of intent was issued by the state government before the commencement of the 2015 Amendment Act.  The Bill provides that the right to obtain a prospecting license or a mining lease will lapse on the date of commencement of the 2021 Amendment Act.  Such persons will be reimbursed for any expenditure incurred towards reconnaissance or prospecting operations.
  • Extension of leases to government companies: The Act provides that the period of mining leases granted to government companies will be prescribed by the central government.  The Bill provides that the period of mining leases of government companies (other than leases granted through auction) may be extended on payment of additional amount prescribed in the Bill.
  • Conditions for lapse of mining lease: The Act provides that a mining lease will lapse if the lessee: (i) is not able to start mining operations within two years of the grant of a lease, or (ii) has discontinued mining operations for a period of two years.  However, the lease will not lapse at the end of this period if a concession is provided by the state government upon an application by the lessee.  The Bill adds that the threshold period for lapse of the lease may be extended by the state government only once and up to one year.
  • Non-exclusive reconnaissance permit: The Act provides for a non-exclusive reconnaissance permit (for minerals other than coal, lignite, and atomic minerals).  Reconnaissance means preliminary prospecting of a mineral through certain surveys.    The Bill removes the provision for this permit.

Significance:

  • This will speed up the process of implementation of projects, ease of doing business, simplification of procedure and benefit all the parties in areas where minerals are located.
  • It will create an efficient energy market and bring in more competition as well as reduce coal imports. India imported 235 million tonnes (mt) of coal last year, of which 135 mt valued at Rs 171,000 crore could have been met from domestic reserves.
  • It might also put an end to Coal India Ltd’s monopoly in the sector.
  • It would also help India gain access to high-end technology for underground mining used by miners across the globe.

Conclusion:

There is significant scope for new mining capacities in iron ore, bauxite and coal and considerable opportunities for future discoveries of sub- surface deposits. Infrastructure projects continue to provide lucrative business opportunities for steel, zinc and aluminium producers. Considering these factors, the schemes will prove highly progressive to aid the mines and minerals sector in India.