Updated: Nov 22, 2021
The Mines and Minerals (Development and Regulation) Amendment Bill, 2021 amends the Mines and Minerals (Development and Regulation) Act, 1957. Which provides a detailed framework with rules and regulations for the mining sector in India. The lower house of the Parliament passes the MMDR, Amendment bill, 2021 which will remove the restrictions of end-use for future auction of mineral mining rights. The government introduces the bill to liberalize Captive miners. The subject of mineral regulations and development occurs at serial no. 23 of the state list under the 7th schedule of the Indian Constitution. However, the constitution circumscribes this Power by giving Parliament to legislate on this matter under entry 54 of the Union list under the 7th schedule of the Indian Constitution. This amendment renewable the auction process for mineral and coal mining rights. Union minister for coal and mines Shri Pralhad Joshi said, “ the amendment bill which was introduced in the Lok Sabha on 15th March aimed at boosting India’s total mineral output”. The contribution of the mining sector to the GDP is 1.75%, 1% growth in the mining sector creates almost 55lakh employment opportunity.”
The MMDR Act, 1957
The MMDR Act, 1957: The mines and minerals sector is governed by the Mines and Minerals Act of 1957. This act provides for:
o The governance of mining leases within the country.
o The purpose of why the lease is given.
o How to ensure the well being of the people living in the areas where mines are auctioned.
“The Bill replaces the of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act). The CMSP Act provides for the auction and allocation of coal mines whose allocation was cancelled by the Supreme Court in 2014.”
“Schedule I of the Act provides a list of all such mines; Schedule II and III are sub-classes of the mines listed in the Schedule I.”
“Schedule II mines are those where production had already started before the Supreme court’s order in 2014 and Schedule III mines are ones that had been earmarked for a specific end-use.”
MINES AND MINERALS (DEVELOPMENT AND REGULATION ) AMENDMENT BILL,2021
Amendment Bill has been passed. By the Lok Sabha on 19th March, 021, which introduced by the Union minister for coal and mines Shri Pralhad Joshi. The bill was passed through a voice vote in the Lok Sabha. The bill seeks to amend the Mines and Minerals (Development and Regulation) Act, 1957 and provides for the separation among Captive and merchant mines. The ament bill is not for the private parties it only attracts Centre public Service Enterprise. “The amendment proposes to permit captive miners of each coal and other minerals to sell as much as 50% in their manufacturing after assembling the necessities of the end-use plant on paying extra royalty to the government. Miners are presently allowed to use extracted minerals for their industrial use. The amendment likewise proposes to fix extra royalty instalments to the state government, for expansion of the Digging/mining lease For Centre Public Service Enterprise. The bill proposes to empower the union government to conduct the auction and re-auction process for the grant of mining lease state government fails to do so within the specified period with a consultation with the concerned state government.”
KEY TAKE AWAY FROM THE BILL
Removal of restriction on end-use of Mineral: -
The act empowers the Union 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 amendment act provides that no mines will be a reserve for end-use.
Sale of minerals by captive miners: -
The amendment proposes to allow captive miners of both coal and other minerals to sell up to 50% of their production after using the extraction in their industrial use.
The lessee should pay extra charges for minerals sold in the open market.
Auction by the central government in certain cases: -
The amendment bill empowers the Union government to conduct the auction and re-auction process for the grant of the mining lease. If the State government fails to complete the auction process within a specified period, in consultation with the concerned state government.
Allocation of mines with expired lease: -
The amendment bill proposes that those mines whose lease has been expired may be allocated to the company of central government under certain circumstances.
This will be pertinent if the auction process for conceding a fresh lease has not been completed or the new lease has been ended within a year.
The State Government at its discretion may grant the least of such mine to the government company for the span, not more than 10 years.
Extension of the lease to the government companies: -
The new amendment act provides that the time of mining lease allotted to the government organization will be recommended by the central government and might be reached out on instalment of extra money endorsing the bill.
Condition for the lapse of mining lease -
If the lessee will not be able to start the extradition/mining process from the mines auction within the span of 2years.
If the lessee discontinued the mining process for 2 years.
As per the Union minister for coal and mines, the implementation of the proposed reform in the mining sector will be fruitful in the long run. And will also create more than 55 lakhs of employment opportunity. The minister clarified that all the generated revenue from the mining activities will be utilized by the state government only.”
The proposed amendment also attracts foreign direct investment and advanced technologies in the mining sector. Market flexibility also increases through this amendment as it allows miners to maximize the output from Captive mines as they would be allowed to sell the excess output into the open market. Industrial players will also, welcome this very proposal as it would likely lead to greater transparency in the auction process. It will also speed up the process of implementation of various projects. This amendment also creates an efficient energy market by bringing competition to the mining sector.
The amendment bill seeks to introduce some wanted relaxation that could potentially not only helpful for the trader or industrial players within the market but also helps in attracting foreign direct investment and advance uses of technology in the mining sector. The relaxation process for the miners to sell their excess outputs into the open market by paying considerable royalty to the state government, help in the nation-building by creating revenue and employment within the state. Which ultimately adds to the National GDP.
“State governments will somehow object to some provisions of the proposed amendment bill as it fixes an additional royalty to be said by Centre Public Service Enterprises, for the extension of the lease period. This may lead to lower revenue compared to the transparent auction process. It is important and essential to note that the Bill aims to transfer considerable powers to the Central Government, exercisable as appropriate after consultation with the authorities, to offer exemptions and to give favourable treatment to such groups of miners/traders as deemed fit under the Act. It will be interesting to note the final form in which the Indian Parliament adopts the Bill and whether any further amendments to the Act are being proposed following the current pandemic.”