Mining law: Ordinance to open exploration to pvt firms

Both public and private companies to be allowed to explore; companies to give 2% of royalty to a proposed exploration trust; leases to only be auctioned, for a uniformly specified period

A day after confusion over the reported clearance of the mining laws ordinance by the Union Cabinet, senior government officials told Business Standard it had been approved on Monday but with a few significant changes from the Bill in question.

The changed regime will allow awarding of multiple reconnaissance permits to public and private companies in the same area under an ‘Open sky policy’ and setting up a National Mineral Exploration Trust (NMET). These are in addition to introduction of auctioning and provisions for benefit sharing with project-affected locals.

The ministry plans to quash the 60,000-odd applications for mineral concession and renewals pending at the state level, before starting the auctioning of minerals, except in a few cases where action is in progress.

DIGGING DEEP

• In a first, all mineral leases to be awarded through only auctions
• Multiple Reconnaissance Permits (RPs) for a single area to be issued under the “open-sky policy”
• Separate trust for exploration to be formed; miners to contribute 2 percent of their royalty towards it
• For mining leases pending renewal, transition period of 15 years for captive mines and 5 years for others
• Leases to be awarded for 50 years; no renewals to be given

“These steps will help eliminate discretion, improve transparency, reduce delay and simplify procedures for the industry. We are confident the law will lead to a 20 per cent growth in the mining sector in the next financial year,” said a government official.

The official added that companies, in line with ordinance, might have to give a share of their revenue to the NMET, a body to function on similar lines to the Geological Survey of India and Mineral Exploration Corporation Ltd. Mining companies will pay two per cent of the royalty paid to the government to NMET. The trust will use this fund for exploration.

For all mine leases pending for further renewal (around 2,500), the government has decided to give a transition period of at least 15 years for captive mines and five years for other mines. It has decided to end the process of granting mining leases on a ‘first come, first served’ basis, introducing the mandatory auction route. The source said notified minerals such as bauxite and iron ore will be auctioned for grant of leases; non-notified minerals will be auctioned for award of prospecting licences-cum-mining leases. However, the Union government will frame separate rules for leases of public sector units and for atomic minerals, the source added.

The leases will be awarded for 50 years without renewals and there will be a compulsory auction at the end of the lease period. The provision is aimed at addressing issues arising out of the Supreme Court judgments on second and subsequent renewals, the source said.

The ordinance will also introduce a system of allowing mining companies to transfer leases got through the auction route, after a notice period of 90 days.

The Centre has also empowered itself to prescribe deadlines for multiple processes and to issue binding directions to state government, “to eliminate delay.”