Centre nod for concessions to end in new mining law

The new mining law being framed by the government is a hotbed of controversy in more ways than one. While the unrest over a profit-sharing regime and bidding of mining rights proposed under the new law continues, the government has now indicated lifting the Centre’s powers for approving award of concessions for critical minerals, including iron ore.

The current Mines and Minerals Development and Regulation Act, 1957 allows state governments to award concessions for all minerals, except for some major ones like iron ore, limestone and chrome and minerals of strategic importance like uranium, where the Centre’s prior approval is mandatory.

The 10-member Group of Ministers (GoM) that drafted the new MMDR Bill, 2010, has decided to do away with the provisions in the current Act from which the Centre derives this power. “We cannot have both bidding and prior approval. There is no concept of prior approval once we remove arbitrary discretion and induce transparency by introducing bidding for minerals which is being done in the new Act,” said a mines ministry official.

Section 5 of the MMDR Act of 1957 says: “In respect of any mineral specified in the First Schedule, no prospecting licence (PL) or mining lease (ML) shall be granted (by the state government) except with the previous approvals of the central government.” The First Schedule contains energy minerals like coal and lignite, metallic and non-metallic minerals like iron ore, bauxite and chrome and atomic minerals like uranium.

The draft of the new MMDR Bill exempts concessions in minerals like iron ore and bauxite from the Centre’s approval. Under Section 8, the new Bill says: “The state government shall grant reconnaissance licence (RL), large area prospecting license (LAPL) PL and ML provided that an RL, LAPL, PL and ML in respect of coal minerals, atomic minerals and beach sand minerals shall be granted by the state government with the prior approval of the central government.”

Iron ore alone accounts for 20 per cent of India’s overall mineral production of 1,113 million tonne annually. In value terms, the mineral contributes Rs 34,800 crore, or 18 per cent of the overall value of minerals produced at Rs 2 lakh crore annually.

Among metallic minerals, iron ore contributes as much as 83 per cent of the overall value of production of Rs 41,800 crore. Iron ore’s importance to the domestic mineral sector does not end here. It accounts for over 22 per cent of India’s overall value of mineral exports of around Rs 1,27,800 crore.

The controversial move to forsake the Centre’s prior approval for granting mineral concessions in major minerals like iron ore is not likely to go down well with stakeholders, including the steel ministry.

The move, in fact, was the first trigger for the uproar over the mining Bill that began in early 2010 when the steel ministry argued that the proposal would trigger serious trouble for the mining sector as the mineral rich states would then be free to grant concessions on their own.