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  • 27 July, 2021

  • 20 Min Read

Reforms in the Mining Sector

Reforms in the Mining Sector

  • Geological Survey of India: For all minerals except Uranium (AMD). It is the largest and most comprehensive provider of basic earth science information or database.
  • Indian Bureau of Mines, 1948:
    1. It is under Ministry of Mines with responsibilities for conservation and systematic exploitation of mineral resources other than coal, petroleum and natural gas, atomic minerals and minor minerals.
    2. IBM performs regulatory functions under MMDRA, 1957.
  • NALCO is a Navratna company under Ministry of Mines. Refinery is located at Damanjodi in Koraput district, Odisha.

Mines and Minerals (Development and Regulation) Act, 1957

  • It regulates overall mining sector in India and specifies the requirement for obtaining and granting mining leases.
  • "Minerals” includes all minerals except mineral oils- natural gas and petroleum).
  • A person could acquire 1 mining lease for a maximum area of 10 sq km. Center can permit >1 leases.
  • A mining lease was grantMed for a minimum 20 to max 30 years and could be renewed for a period not exceeding 20 years.
  • In India, the minerals are classified as minor minerals and major minerals under MMDRA, 1957. Classification is not related to quantum/ availability/ level of production/ mechanization/ EXIM of these minerals but related to relative value and end use of these minerals.

Minor Minerals

Major Minerals

  1. According to MMDR Act, 1957 “Minor Minerals” means building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other Central Govt notified mineral.
  2. Center has the power to notify “minor minerals” under MMDR Act, 1957. India has 86 minor minerals out of which 31 added in 2015.
  3. Power to frame law for minor minerals is entirely delegated to State Govts. Thus, the administrative and regulatory jurisdiction of minor minerals falls under State govts.
  4. AP tops in the value of minor minerals produced in India followed by Gujarat, Maharashtra, Rajasthan and UP.
  1. Major minerals are those specified in the first schedule appended in the MMDR Act 1957 and the common major minerals are Lignite, Coal, Uranium, iron ore, gold etc.
  2. There is no official definition for “major minerals” in the MMDR Act. Hence, whatever is not declared as a “minor mineral” may be treated as the major mineral.
  3. Power to frame law for major minerals are dealt by Ministry of Mines under Center.

MMDRA (Amendment) Act, 2015

  • Center can increase the area limits for mining, instead of providing additional leases.
  • The Bill creates a new category of mining license i.e. the prospecting license-cum-mining lease. State govt shall grant prospecting license-cum-mining leases for both notified and other minerals. Prospecting license-cum-mining lease for notified minerals (like bauxite, iron ore, limestone and manganese ore) shall be granted with the approval of Centre. Holder of this licence may transfer the lease to any eligible person, with the approval of the state govt.
  • Center shall prescribe the terms and conditions, and procedure for auction, including parameters for the selection of bidders.
  • Center may reserve particular mines for a specific end use and allow only eligible end users.
  • Bill provides for the creation of a District Mineral Foundation (DMF) and a National Mineral Exploration Trust (NMET).

DMF (District Mineral Foundation), 2015

PM Khanij Kshetriya Kalyan Yojana, 2015

National Mineral Exploration Trust (NMET), 2004

  1. Trust. Non Profit Body. In those districts affected by mining. It should be in every district mandated by MMRDA, 2015. Operated by State Govt.
  2. Funded through contribution from miners.
    1. For all mining leases executed before 12 Jan 2015, miners will have to contribute 30% of the royalty payable by them to DMFs and
    2. If leases are granted after 12 Jan 2015 then pay 10%.
  3. DMF contribution would be < 1/3rd of royalty and Center retains the power to prescribe rates of contribution, though DMF is operated by State Govt. DMF funds are treated as Extra Budgetary resources.
  4. It implements PMKKKY for welfare of mining areas.
  5. DMFs are also directed to maintain utmost transparency in their functioning and provide periodic reports on various projects and schemes.
  1. To provide for welfare of areas & people affected by mining areas. Implemented by DMF. Affected persons include "affected family" and "displaced family".
  2. Objectives:
    1. To implement developmental & welfare projects in mining affected areas.
    2. To reduce adverse impact on Environment & Health and
    3. Long term sustainable livelihoods.
  3. Both directly & indirectly affected areas covered.
    1. Directly affected areas include areas of direct mining related operations like excavation, mining, blasting, etc.
    2. Indirectly affected areas include areas of deterioration of water, soil and air quality.
  4. Utillization of Funds
    1. 60 % Funds to be used for High priority areas = Water, Health, Education, Vulnerable section, skills and sanitation.
    2. 40% Funds to be used for Infrastructure projects = Physical Infra, irrigation, Energy, Watershed development.
    3. <5% to be used for Admin expenses.
  5. Monitoring is done by DISHA, District Development Coordination and Monitoring Committee of MoRD.
  1. For regional & detailed exploration of minerals.
  2. Under MMRDA, 2015.
  3. Holder of mining use = pay MET = 2% of royalty.
  4. Under Central Govt.

Difference from DMF:

  1. Different rate of contribution 2% in NMET; 10% and 30% in DMF.
  2. NMET works relates to Exploration and DMF works in welfare.
  3. MET is under Central Govt and DMF is under State Govt.

Mining Surveillance System

  • by MoMines (IBM) + MEITy and BISAG (Bhaskaracharya Institute of Space App & Geoinfo)
  • To curb illegal mining. It is a satellite based monitoring system.

Mining Tenetment System (MTS): For accounting of all minerals.

Mines and Minerals (Development and Regulation) Amendment Bill, 2021

The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 was introduced in Lok Sabha on March 15, 2021. 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:
    1. 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.
    2. The Bill provides that no mine will be reserved for particular end-use.
  1. Sale of minerals by captive mines:
    1. 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.
    2. The central government may increase this threshold through a notification.
    3. The lessee will have to pay additional charges for mineral sold in the open market.
  2. Auction by the central government in certain cases:
    1. Under the Act, states conduct the auction of mineral concessions (other than coal, lignite, and atomic minerals).
    2. Mineral concessions include mining lease and prospecting license-cum-mining lease.
    3. The Bill empowers the central government to specify a time period for completion of the auction process in consultation with the state government.
    4. If the state government is unable to complete the auction process within this period, the auctions may be conducted by the central government.
  3. Transfer of statutory clearances:
    1. Upon expiry of a mining lease (other than coal, lignite, and atomic minerals), mines are leased to new persons through auction.
    2. The statutory clearances issued to the previous lessee are transferred to the new lessee for a period of two years.
    3. The new lessee is required to obtain fresh clearances within these two years.
    4. The Bill replaces this provision and instead provides that transferred statutory clearances will be valid throughout the lease period of the new lessee.
  4. Allocation of mines with expired leases:
    1. 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.
    2. 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.
    3. 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.
  5. Rights of certain existing concession holders:
    1. In 2015, the Act was amended to provide that mines will be leased through an auction process.
    2. Existing concession holders and applicants have been provided with certain rights including:
      1. 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
      2. 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.
    3. 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.
    4. Such persons will be reimbursed for any expenditure incurred towards reconnaissance or prospecting operations.
  6. Extension of leases to government companies:
    1. The Act provides that the period of mining leases granted to government companies will be prescribed by the central government.
    2. 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.
  7. Conditions for lapse of mining lease:
    1. The Act provides that a mining lease will lapse if the lessee:
      1. is not able to start mining operations within two years of the grant of a lease, or
      2. has discontinued mining operations for a period of two years.
    2. 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.
    3. 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.
  8. Non-exclusive reconnaissance permit:
    1. The Act provides for a non-exclusive reconnaissance permit (for minerals other than coal, lignite, and atomic minerals).
    2. Reconnaissance means preliminary prospecting of a mineral through certain surveys.
    3. The Bill removes the provision for this permit.

Source: TH

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