Mining leaseholders urge govt to honour concessions saved under regulations

Fimi says existing leaseholders have invested huge resources and time to undertake risky exploration activities and have helped India to discover valuable mineral deposits

The Union government is aiming to open up around 500 mineral blocks for auctions, stoking fears of usurping concessions like Reconnaissance Permits (RPs) and Prospecting Licenses (PLs) of existing leaseholders.

These cases were saved under Section 10A 2(b) and 2(c) of the Mines and Minerals- Regulation & Development (MMDR) Act.

To ensure seamlessness in the mining sector, Finance minister Nirmala Sitharaman recently announced the introduction of Composite Exploration-Cum-Mining-Cum-Production License (CEMPL) and award of 500 mineral blocks via the open and transparent system of auctions.

Federation of Indian Mineral Industries (Fimi) has commended the government for the futuristic steps. However, the mineral lobby body has flagged fears of possible deletions of Section 10A 2(b) and 2(c) wherein existing holders of RP and PL have already been guaranteed seamless transition to the mining stage.

“We wish to submit that these existing RP/PL holders have invested huge resources and long years to undertake risky exploration activities and have helped India to discover valuable mineral deposits. Acknowledging their valuable contribution to the country, the government had introduced Section 10 A (2)(b) in 2015 to guarantee these concessionaries the right to mine the deposit if they satisfy the conditions mentioned above, thereby creating vested rights with such concession holders”, R K Sharma, secretary general, Fimi wrote to Prime Minister Narendra Modi.

Though five years have elapsed, not even a single holder of RP or PL has won a mining lease.

“Any act on the part of the government to remove Section 10A(2)(b) from the Act would amount to “robbing Peter to pay Paul”. In all such cases where the concession holders have satisfied the conditions of their RP/PL and have established the evidence of mineral content in the granted areas by conducting reconnaissance or prospecting at their own expense, they have vested rights for mining lease. If the cases saved under Section 10A(2)(b) are cancelled, it will mean that Government of India has faltered on its Act and will lead to irreparable loss of investor confidence in Indian mineral sector, apart from multiple litigations in courts resulting in such an exercise of the Government being rendered completely futile”, Sharma added.

Sections 10 A(2)(b) & (2)(c) were inserted during 2015 amendments  to MMDR to assure the existing mining lease holders who had invested their time and money in exploration of minerals or had  up the captive infrastructure facilities, plants, or even enhance their plant capacity,  based on the certainty with respect to preferential rights to mining lease in due course. 

“Many companies have made borrowings to finance their captive infrastructure with the certainty of feed stock in future from preferential mining lease rights and sudden retroactive policy changes like this may lead them to either insolvency or severe liquidity crunch in these testing times”, said a senior executive with a mining company.