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MMDR Amendment Bill 2021 – Key Highlights – What are the new Rules for Mining Rights?

MMDR Amendment Bill 2021 – Key Highlights – What are the new Rules for Mining Rights?

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  • GS 1 || Geography || Indian Economic Geography || Mineral Resources

Why in the news?

New rules for mining rights MMDR Amendment Bill

Present Context:

Coal and Mines Minister Prahlad Joshi has introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 in LokSabha, to streamline the renewal of the auction process for minerals and coal mining rights.

About mining in India:

  • India produces 95 minerals, including 10 metallic and 23 non-metallic minerals, and has substantial reserves of iron ore, bauxite, chromium, manganese ore, baryte, rare earth minerals, and mineral salts.
  • Onshore and offshore crude oil and gas, coal, iron ore, copper, and bauxite are abundant in Indian sub soils, etc.
  • Currently, the mining industry contributes about 2.5 percent of GDP.
  • Other than fuel, atomic, and minor minerals, only about 20% of India’s geographical area is under mining lease.
  • India is the world’s leading producer of coal, iron ore, chromite, mica, and bauxite, thanks to its numerous mineral deposits.

Power associated with Mining and Minerals sector in India:

  • It has been included in the Union List of the Indian Constitution’s Seventh Schedule as one of the subjects:
    • Serial number 53: Oilfields and mineral oil resources regulation and development; petroleum and petroleum products; other liquids and substances considered dangerously flammable by Parliament by law
    • Serial number 54: Regulation of mines and mineral production to the degree that such regulation and development is deemed by Parliament by law to be expedient in the interests of the Union.
    • **Serial number 23: Regulation of mines and mineral production subject to the provisions of List I with respect to regulation and development under the Union’s control is included in the State list.
  • About Mining in the federal structure of India:
    • The Central Government owns minerals under the ocean in India’s territorial waters or exclusive economic zone, and the State Governments own minerals within the state’s borders.

**Under the terms of the Mineral Concession Act, state governments award mineral concessions for all minerals found within their borders Mineral Concession Rules, 1960 (MCR) framed under the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR).

Mines and Minerals (Development and Regulation) Act (1957)

  • The Mines and Minerals (Regulation and Development) Act (1957) governs India’s mining industry and applies to ALL minerals, with the exception of minor minerals and atomic minerals.
  • It explains the steps and requirements for obtaining a mining or prospecting license in India, while minor minerals are dealt with by state governments.
  • (According to the Panchayats (Extension to Scheduled Areas) Act, 1996 (PESA), prior to granting a prospecting license or mining lease for minor minerals, or a concession for the extraction of minor minerals by auction in the Scheduled Areas, Gram Sabha and Panchayats at appropriate levels must make recommendations.)

Proposed point in the Bill 2021:

  • 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). 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.
  • Auction by the central government in certain cases: 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: 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.
  • Rights of certain existing concession holders: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 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 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 of the Amendments proposed in the bill:

  • Miners would be able to optimize production from captive mines thanks to the increased flexibility proposed in the MMDR Amendment bill, as they would be able to sell output in excess of their own needs.
  • Mining industry players may applaud the move allowing the Central Government to conduct auctions in the event that the state government fails,
    • As it will possibly lead to greater transparency in the auction process, as there is a perception that state governments will prefer some bidders and attempt to delay or cancel mining rights if their preferred bidders do not win mining rights for this project.

Controversies:

  • NMDC had halted operations at the Donimalai mine for over two years due to disputes over the additional royalty to be paid by the state-owned NMDC to the Karnataka government for the extension of mining rights at the mine.
  • Following an interim agreement on the additional royalty to be charged to the Karnataka government, NMDC recently resumed operations.

Way ahead:

  • Another significant reform proposed by the Bill is the right of the central government to conduct auctions or re-auctions for the grant of mining leases if a state government fails to complete the auction process within a given time defined after consultations between the Centre and the state governments.
  • Industry players will support the move because it will likely increase transparency in the auction process, as there is a perception that state governments will favor some bidders and attempt to postpone or cancel mining rights if their favored bidders do not win mining rights.

Mains oriented question:

Mining sector is one of the major economic sector for govt. yet in there are many issues associated with mining. Elaborate the statement with suitable example. (200 words)