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

The Bill seeks to amend the Mines and Minerals (Development and Regulation) Act, 1957 and further regulate the mining sector in India by:

• Permitting removal of restriction on end-use of minerals;
• Enabling captive mines to sell up to 50% of their annual mineral production in open markets;
• Easing the process of statutory clearances by allowing its transfer from one lessee to another;
• Allowing private companies to enter mining exploration; etc.

Salient Features

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 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 a 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. However, the lessee will have to pay additional charges for mineral sold in the open market.

Auction by Central Government

Under the Act, states conduct auctions for granting mining leases. The Bill provides that where the State Government has not successfully completed auction process within a specified time, the Central Government may take over and conduct such auction.

Transfer of statutory clearances

Presently, upon expiry of mining lease of a particular lessee, fresh auctions are conducted and the statutory clearances issued to 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 provides that the transferred statutory clearances will be valid throughout the lease period of the new lessee. This is expected to reduce compliance burden.

Allocation of mines with expired leases

The Bill provides that such mines, whose lease has expired, may be allocated to a Government company in cases where:

• the auction process for granting a new lease has not been completed
• the new lease is terminated within a year of the auction.

Such lease to a Government company shall be valid for a maximum period of 10 years or till selection of new lessee through auction, whichever is earlier.

Inclusion of Private companies

The Bill provides that the words "private entities that may be notified" shall be added to the second proviso to Section 4 of the principal Act which contemplates grant of license for prospecting or mining operations.

Discussion on the Bill

Speaking on the Bill, Union Minister Pralhad Joshi said that the mining sector in India is very weak and despite being the 4th largest Coal reserve, India still has to import Coal.

He emphasized that in India mining contributes only 1.5% to GDP whereas other coal reserve nations like South Africa and Australia contribute 7%.

The reason for this, he said, is non-involvement of private companies in this sector. He added that the Bill enables private players having advanced technology to enter exploration and boost the sector. This, he claimed, will also generate about 55 lakh direct and indirect employment opportunities. The government is also proposing to make National Mineral Exploration Trust (NMET) an autonomous and professional body, which would provide fund for exploration.

Eleven out of fourteen parties represented in the House sought that the Bill be referred to the Select Committee.

Congress MP Digvijay Singh said that most mines are located in poor, tribal areas. Thus, the Bill must include a provision for seeking consent from Gram Sabha, before any mining activity may be carried out.

He added that mostly the labour class of the society works in mines. Thus, entry of private players will be detrimental to their interests.

Negating this apprehension, BJP Samir Oraon said that the proposed amendments will bring opportunities for the tribals by making way for exploration of mines situated around them.

Other concerns raised during the debate:

• Privatization comes with risks of monopolization and black marketeering. Mining sector already prone to irregularities and corruption. Thus, the Government should design a mechanism to include safeguards.
• Nothing in the Bill ensures that mineral allocation will be prioritized for public sector companies. The Government must make provisions for allocation to public sector first and the remaining should be allocated to the private companies.
• Section 10(1) of the Amendment Act that empowers the Central Government to determine the functioning of District Mineral Foundation encroach on the rights of State Government.
• The District Mineral Funds under the Act are intended to benefit such areas that are degraded due to mining activities. Since the State Governments will have better insight on the problems and requirements of people in such region, the Fund should be managed by States. Permitting the Central Government to direct utilization of the DMF shall not be not be viable in such a scenario.
• Section 14(3) of the Amendment Act that empowers the Central Government to conduct auctions when the State Government is unable to, is also violative of State's rights and makes a mockery of federalism.

Click Here To Download Bill