Amendment to Mines and Mineral Act, 1957

In News

Recently, the government has introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 in the Lok Sabha to amend the Mines and Mineral (Development and Regulation) Act, 1957.

Changes under the Amendment

• Removal of Restriction on End-use of Minerals
  • 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.
  • No mine will be reserved for particular end-use.
• Sale of Minerals by Captive Mines
  • 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 minerals sold in the open market.
• Auction by Government in Certain Cases
  • Empowers the central government to specify a time period for completion of the auction process in consultation with the state government.
    • States conduct the auction of mineral concessions, which include mining lease and prospecting license-cum-mining lease.
  • 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
  • Mines are leased to new persons through auction upon expiry of a mining lease and 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 amendment 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
  • Mines with expired lease may be allocated to a government company in certain cases.
  • 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
  • The Act was amended in 2015 to provide that mines will be leased through an auction process.
  • Existing concession holders and applicants have been provided with certain rights including,
    • 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).
    • 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 period of mining leases granted to government companies will be prescribed by the Central Government.
  • The period of mining leases of government companies (other than leases granted through auction) may be extended on payment of additional amounts prescribed in the Bill.
• Conditions for Lapse of Mining Lease
  • Mining lease will lapse if the lessee,
    • Is not able to start mining operations within two years of the grant of a lease, or
    • 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 also 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 Bill removes the provision 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.   

Significance

• Reforms include removing the distinction between captive and non-captive mines.
  • Captive mines are those that produce coal or mineral for exclusive use by the company that owns the mines, while non-captive ones that produce as well as sell the fuel.
  • With the distinction removed, captive mines will also be able to sell their stock.
• Introduction of an index-based mechanism by developing a National Mineral Index (NMI) for various statutory payments, among others.
• In order to boost exploration, there will be a review of the functioning of the National Mineral Exploration Trust (NMET), which will be made an autonomous body.
• Private entities will also be engaged in exploration works now. Simplification of the exploration regime will also be done to facilitate a seamless transition from exploration to production.
• These reforms will generate huge employment opportunities, reduce imports and increase production by bringing large mineral blocks into an auction.
• The amendments will bring mega reforms in the mines sector with a resolution of legacy issues and also make a large number of mines available for auctions.
• It will help strengthen the auction-only regime and boost transparency in the system.

Criticism

• The Bill fails to acknowledge the adverse impact on the environment and biodiversity.
• It is a threat to the lives of people residing close to the mines.
• It also impinges on the federal structure of the states.

Source: TH