The mining industry in India has always flourished- with the potential to offer value to its investors as well as the public. Mining Industry is not only a great contributor to the Gross Domestic Profit (GDP) of the country but also provides raw material that support the manufacturing and infrastructure industry, which constitute a major part of the economy.
India’s mineral production index of mining and quarrying stood at 111.9 in November 2021, which is 5% higher than the previous year. Coal was considered to be the most important mineral in November 2021 with a production of 679 lakh tonnes followed by lignite, natural gas, petroleum, and bauxite with a production of 33 lakh tonnes,2798 million cu m,24 lakh tonnes and 1710 thousand tonnes, simultaneously.[1]
India’s mining industry is recently going through its biggest legislative transformation in the form of the The Mines and Minerals (Development and Regulation) Amendment Act,2021 which is a major step towards revising the provisions of Mines and Minerals (Development and Regulation) Act, 1957.
OBJECTIVE
The new act specifies amendments to three earlier laws, pricing formula for minerals, exploration of mines and several taxes and duties levied on mining. The prime objective of the act is to utilize the full potential of the mining industry by expanding investment levels and generating employment opportunities. It also focuses on improving ease of doing business in the country[2]. This will increase revenue of the mining industry which will add up to the growth of country’s GDP. Also, procedure has been developed to increase the transparency of the auction transaction, in order to increase the extent of consideration and auction for resources. In addition, it also intends to solve the consequences of the past happenings of the mining industry.
REFORMS IN THE MINING SECTOR
Notable changes brought up by the Amendment act 2021 are:
- TRANSFER OF STATUTORY CLEARANCES
Section 8(B) of the Mines and Minerals (Development and Regulation) Act, 1957 talks about the transfer of statutory approvals. It states that upon termination of the mining lease, mine moves to new person through auction.[3]
The new amended act removes this restriction and provides that statutory allowances and licenses will be legitimate till the exhaustion of mineable reserves even upon the termination of the mining lease. Afterwards, the government will transfer all statutory rights to the successful upcoming bidder through an auction.[4]
- REMOVAL OF RESTRICTIONS ON END UTILIZATION OF CAPTIVE MINES
The new act has eradicated the distinction between the captive mines and merchant mines. As per the previous act, companies (other than coal, lignite, and atomic minerals) can only utilise the mine for prescribed uses but now they are permitted to use the same for their own consumption or any other purposes as well and is not restricted to the prescribed usage only.[5]
Legal provisions for the sale of minerals extracted from captive mines were introduced. The new subsection to Section 8, permits captive mines (other than atomic minerals) to sell up to 50% of annual mineral production after meeting the needs of their own plant, but lessee has to pay extra charges to the government for the mineral sold in the open market
- ALLOCATION OF MINES, EXTENSION, AND LAPSE OF MINING LEASE.
The state government will decide the period of mining leases together with the ongoing mining leases for the government entity and companies. An additional amount needs to be paid if the State government stretches the period of mining lease of government corporation and companies[6]
- LAPSE AND EXPANSION OF MINING LEASE
As per the 1957 Act, if the lessee fails to commence the mining operation within 2 years of the lease permit or the operation has been discontinued for a minimum of 2 years, the lease stands expired from the date of such period.[7]
The newly substituted provisions states that the mining lease will not lapse after the end of specified period if the State government has provided concession after the application by the lessee. State government can also increase the threshold period of the lapse of the mining lease once and till one year.[8]
- ALLOTMENT OF MINES TO GOVERNMENT COMPANIES WITH EXPIRED LEASES.
Section 8B of the new legal regime provides State government with the power to allocate the mining lease to a Government company for a period of 10 years or until a new lessee is being selected, whichever is earlier, if the auction process for granting lease is not completed or the new lease has been expired under 1 year from auction.[9]
- RIGHTS OF CERTAIN EXISTING CONCESSIONS
The new legal regime states that the right to obtain a mining lease or prospecting license will lapse on the date of commencement of the Act. To secure the rights of such persons, they are to be reimbursed for any expenditure sustained towards prospecting operation or reconnaissance, in such a procedure as prescribed by the Central Government. [10]
ISSUES
- SCOPE OF INTERVENTION IN THE STATE MATTERS.
A new proviso to the Section 10B (4) and Section 11(5) provides the Central government with the power to step in and conduct the auction of mineral concessions in respect of mentioned minerals, if the State Government fails to conduct the same within the stipulated time period assigned by the Central Government.[11]
This gives the Central government a passage to interfere in the State matters without any specific scope of intervention.
- ROYALTY FIXATION FOR EXPANSION OF LEASE.
The state may also oppose to the royalties being fixed by the central government for extension of mining lease and directs the expenditure of the District Mineral Fund. This may create conflicting opinion between the both.[12]
- TRIBAL COMMUNITIES
DMF is a statutory body set up by the State government to work for the benefit and interest of the people affected by the mining activity or in the mining region, mainly towards the tribal communities. The Central government may direct the utilisation of DMF’s funds[13] which may lead to different opinion in comparison to the utilization direction of State government.
- ENVIRONMENTAL CONCERN
It will be exempted to mine within a lease area, which means any infringement within the mentioned area i.e., over extraction or any activity beyond the mining plan will not be considered an illegal mining in the same way. This can lead to many immoral practices or over extraction which may lead to loss of biodiversity.[14]
CONCLUSION
From the article, it becomes clear that The Mines and Minerals (Development and Regulation) Amendment Act, 2021 is a move towards accomplishing the country’s mineral security by revoking and modifying the restrictive practices prevailed in the previous Act. The primary objective is to simplify the working process for the mining industry and attract more investments.
The environmental concerns can be tackled by approving mining sites through Environment Impact Assessment. The scope of intervention by the central government in the matters of the state must be defined. It is necessary to establish an independent regulatory body for restructuring, governance and strengthening the structure of the mining industry.
[1] India’s mineral production is up 5% in 2021, The Economic Times, (Jan 20,2022,06:31 PM), https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/indias-mineral-production-up-5-in-november-2021/articleshow/89020804.cms
[2]Reforms in the mining Sector, PIB Delhi, (Jul 26,2021, 06:22PM), https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1739167.
[3] Mines and Minerals (Development and Regulation) Act,1957, § 8B(India).
[4] Mines and Minerals (Development and Regulation) Amendment Act,2021, § 9(India).
[5] Mines and Minerals (Development and Regulation) Amendment Act,2021, § 7(India).
[6] Mines and Minerals (Development and Regulation) Amendment Act,2021, § 7(India).
[7]Mines and Minerals (Development and Regulation) Act,1957, § 4A (4) (India).
[8]Mines and Minerals (Development and Regulation) Amendment Act,2021, § 5(India).
[9]Mines and Minerals (Development and Regulation) Amendment Act,2021, § 9(India).
[10]Mines and Minerals (Development and Regulation) Amendment Act,2021, § 13(India).
[11]Mines and Minerals (Development and Regulation) Amendment Act,2021, § 14 & §16(India).
[12] Ronak Arora, The New Mines and Minerals (Development and Regulation) Amendment Act, 2021 To bring Noteworthy changes, Mondaq, (Apr. 21,2021,1:45pm), https://www.mondaq.com/india/mining/1059778/the-new-mines-and-minerals-development-and-regulation-amendment-act-2021-to-bring-noteworthy-changes.
[13]Mines and Minerals (Development and Regulation) Amendment Act,2021, § 10(India).
[14] Matthew Hall, India’s New mining reforms explained, Mining Technology, (Mar 17,2021,05;25 pm), https://www.mining-technology.com/features/indias-new-mining-reforms-explained/
YLCC would like to thank Simran Kaur for her valuable insights in this article.
