Cabinet approves amendment to mining law, move to spur M&As

Allows transfer of captive mining rights; move to clear path for cement deals that were stuck due to the earlier law

The Cabinet today cleared an amendment in the new mining law that permits transfer of captive mines granted on discretion. Business Standard had first reported this story earlier this week. 

Major deals among cement companies such as those of UltraTech, Reliance Cements and Lafarge, are stuck because the Mines and Minerals (Development and Regulation) Amendment Act, 2015, permits transfer of mining leases only for auctioned mines.

Now, as the amendment has been cleared by the Cabinet, the government would be tabling it in Parliament soon so that such deals, which involves transfer of non auctioned mines, may go through smoothly.

Auction of non-coal mines was introduced in the new mining law. Earlier, all non-coal mines in India were handed out by state governments on discretion.

In the biggest deal in the cement industry, Aditya Birla Group's UltraTech Cement is acquiring the 22.4 million tonne cement capacity of debt-ridden Jaiprakash Associates for Rs 17,000 crore. To lessen its debts, the Anil Ambani-owned Reliance Infrastructure is selling its cement subsidiary to Birla Corp for Rs 4,800 crore.

And, as a condition for its merger with Holcim, the Competition Commission of India had asked Lafarge to sell two units. The company was unable to sell its two units to Birla Corp because the mining rights could not be transferred.

In January, the government proposed the amendment to "spur merger and acquisitions in the mining sector and help in checking the stressed and non-performing assets of banks by allowing them to liquidate assets where a firm or its captive mining lease is mortgaged".

Parliament will go into recess between March 17 and April 24. The last sitting of the Budget session will be on May 8.