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

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

Why in news?

  • Recently, the Coal and Mines Minister introduced the Mines and Minerals (Development and Regulation) (MMDR) Amendment Bill, 2021 in Lok Sabha.
  • The Bill seeks to amend the Mines and Minerals (Development and Regulation) Act, 1957 which regulates the mining sector in India.

About the MMDR Bill 2021

  • There are two important Acts that govern the mines and minerals in India. They are,
    • The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act)
    • The Coal Mines (Special Provisions) Act, 2015 (CMSP Act).
  • The MMDR Act regulates the overall mining sector in India.
  • Further, the MMDR Act empowers the central government to reserve any mine for the particular end-use(Captive mines).                Mines and Minerals (Development and Regulation) Amendment Bill 2021
  • Similarly, the CMSP Act provides for the auction and allocation of mines.
  • The Mines and Minerals (Development and Regulation) (MMDR) Amendment Bill,2021 amends both the MMDR Act and CMSP Act. Further, it aims to provide holistic development of mines and minerals in India.
  • An Ordinance with similar MMDR bill provisions was also promulgated in January 2020.

Objectives Of The New Bill

  • Increasing the Contribution of Mining to GDP: The objective is to enhance the contribution of the mining sector in the GDP to up to at least 2.75% which at present is around 1.75%.
  • Transparency in the Auction Process: The bill passed by a voice vote (vote given on a topic by responding orally), is aimed at bringing more transparency in the auction processes of the mines.
  • Attracting Domestic as well as Foreign Investment: The government, through this amendment, is making an effort to attract domestic as well as foreign investment in the mining sector plus involvement of safe and effective technology in the sector.
  • Enhancing Employment: The major objective of the amendment is to generate employment in the mining sector and enhance the contribution of the mining sector in the total GDP of the country.

Proposed Amendements

  • 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.
  • Ores and Minerals Extracted from Captive Mines:Earlier, the ores extracted from captive mines were only used by captive industries. The bill allows the leaseholders of captive mines to sell upto 50% of their ore into the open market. There is one caveat; additional charges will have to be paid to the government by the lessee for selling minerals in the open market. The 50% cap is flexible, the government can go above the cap if necessary.
  • Auction by the central government in certain cases: Under the Act, states conduct the auction of mineral concessions (other than coal, lignite, and atomic minerals). Mineral concessions include mining lease and prospecting license-cum-mining lease. 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.            Mines and Minerals (Development and Regulation) Amendment Bill 2021
  • Transfer of Statutory Permissions:The bill provides that all clearances and licences granted shall continue till the reserves have been mined and post the expiry or termination of the lease, will be transferred to the next successful bidder.
  • Allocation of mines with expired leases: The Bill adds that mines (other than coal, lignite, and atomic minerals), 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.
  • Rights of certain existing concession holders: In 2015, the Act was amended to provide that mines will be leased through an auction process. Existing concession holders and applicants have been provided with certain rights. 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 Act provides that the period of mining leases granted to government companies will be prescribed by the central government. The Bill provides that the period of mining leases of government companies (other than leases granted through auction) may be extended on payment of additional amount prescribed in the Bill.
  • Conditions for lapse of mining lease: The Act provides that a mining lease will lapse if the lessee: (i) is not able to start mining operations within two years of the grant of a lease, or (ii) 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 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.

Challenges Associated

  • Intervention of Central Government in State Matters:Auction of a mine is a process where the power rests in the hands of state governments. There might exist ambiguity in the case where there are two different political parties in power at center & state.
  • Environmental Concern:The reforms in the act unshackle the mining sector of India, as much it is beneficial for the development of the country. Mining is harmful from the environmental point of view.
  • Tribal Communities:Several tribal communities and Particularly Vulnerable Tribal Groups (PVTGs) fall into the mining zones. Their residence is also threatened by an increase in mining. Their rehabilitation & compensation is another major issue.

Significance

  • 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.
  • 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.
  • 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.
  • Efficient Energy Market: It will create an efficient energy market and bring in more competition as well as reduce coal imports.

Suggestions

  • Creating other safeguards in long run:The implementation of the MMDR Bill 2021 have to monitor closely for enhancing the contribution of the mining sector to 2.5% of Indian GDP(at present it is 1.75%). The implementation of the MMDR Bill 2021 depends upon various organs of the state and private sector. So, the issues in the implementation have to identify and rectified either Judicially or legislatively or administratively or in other ways.            Mines and Minerals (Development and Regulation) Amendment Bill 2021
  • Protect the Environment:Both the Centre and State government should ensure the protection of the environment. Further, the relaxation of mining to the companies should not violate the provisions of the environment. To ensure that, the government have to create a proper and periodic environmental auditing mechanism.              Mines and Minerals (Development and Regulation) Amendment Bill 2021
  • India needs to reduce the cost of the value addition of minerals:The government has to reduce the losses associated with the value addition of minerals. Or else, India can face challenges in sustaining the industry.
  • Creating adequate infrastructure in other sectors:The development of mines and minerals depend on India’s logistical capability, development of ports, railways etc. So to create an adequate export capacity of Mines and minerals, India needs to develop adequate infrastructure in other sectors.

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