Context: The Lok Sabha on Friday cleared The Mines and Minerals (Development and Regulation) Amendment Bill, 2021. Passed by voice vote, 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. On this edition of The Big Picture we will analyse what the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 entail and how will these reforms enhance the mining sector’s contribution to the country’s GDP?

Background

• India produces 95 minerals and has same potential like South Africa and Australia but the mining sector was under-explored and India still had to import minerals like gold and coal.
• The operators are currently only allowed to use coal and minerals extracted from captive mines for their own industrial use.

Key Proposed Changes
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 minerals sold in the open market.

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

• It provides that transferred statutory clearances will be valid throughout the lease period of the new lessee.
• Currently the new lessee has to apply for fresh clearances within two years of the transfer from the previous lessee.

Allocation of mines with expired leases

• The Bill adds that mines 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.

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 and may be extended on payment of additional amounts prescribed in the Bill.

Conditions for lapse of mining lease

• If the lessee is not able to start mining operations within two years of the grant of a lease.
• If the lessee has discontinued mining operations for a period of two years.
• 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

• Transparency: It would lead to greater transparency in the auction process as there is a perception that state governments may in some cases prefer some bidders, and try to delay or cancel mining rights if their preferred bidders do not win mining rights.
• Maximization of Output: Increased flexibility would allow miners to maximise output from captive mines as they would be able to sell output in excess of their own requirements.
• Ease of Doing Business: It will provide ease of doing business, simplification of procedure and benefit all the parties in areas where minerals are located. It will also speed up the process of implementation of projects.
• Efficient Energy Market: It will create an efficient energy market and bring in more competition as well as reduce coal imports.
• Access to High-End Technology: It would also help India gain access to high-end technology for underground mining used by miners across the globe.