Mines and Minerals (Development and Regulation) Amendment Act 2021

On 22nd March, 2021, the Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, bringing in many reforms to India’s untapped mining industry.

  • The Mines and Minerals (Development and Regulation) Amendment Act 2021 amends the Mines and Minerals (Development and Regulation) Act, 1957.

Need

  • Untapped Mining Potential: Mining in India contributes to only 1.75 per cent of the GDP, while the share for countries like Australia and South Africa is about 7 per cent of the GDP. 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.
  • Huge Import Dependency: India produces coal worth Rs 1.25 lakh crore, yet heavily imports it despite being the third largest storehouse of coal in the world.
  • Growing Environmental Concerns: A lot of mining activities are done illegally which can be devastating for the environment.

Key Changes

Removal of Restriction on End-Use of Minerals

  • The original 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 amendment provides that no mine will be reserved for particular end-use.

Sale of Minerals by Captive Mines

  • It 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.

Auction by Central Government

  • It 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.

Non-exclusive Reconnaissance Permit

  • It provides for a non-exclusive reconnaissance permit (for minerals other than coal, lignite, and atomic minerals).

Concerns Raised over Amendments

  • Privatization comes with risks of monopolization and black marketeering. Mining sector is already prone to irregularities and corruption.
  • The Act doesnot ensure that mineral allocation will be prioritized for public sector companies.
  • Section 10(1) of the Act empowers the Central Government to determine the functioning of District Mineral Foundation encroaching on the rights of the State Government.
  • Section 14(3) of the Amendment Act that empowers the Central Government to conduct auctions when the State Government is unable to, is also violative of State's rights and against the concept of cooperative federalism.

Possibilities and Prospects

  • The Government should design a mechanism to include safeguards against corruption.
  • The Government must make provisions for allocation to public sector first and the remaining should be allocated to the private companies.

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