Mining rules tweaked to prevent backdoor entry of private players

In a bid to bar the backdoor entry of private players into the mining sector, the Union mines ministry has issued fresh guidelines stating that public sector undertakings (PSUs) cannot transfer mines to their private joint venture partners.

"Under no circumstances should the control or majority ownership of the joint venture be transferred to the private party," stated the revised guidelines issued by the mines ministry on the submission of mineral concession proposals on October 31.

According to the guidelines, if a PSU wants to enter into a joint venture, it will have to select its partner through competitive bidding process.

"This is done to curb the backdoor entry of private players through joint ventures. Earlier, the PSUs used to get a mine through special dispensation. When there was a transfer of ownership, the benefit used to get passed on to the private player, which was unfair," explained a ministry official.

On September 24, the Supreme Court had cancelled coal-mining allocations to state government entities on the ground that the operations had been passed on to private companies, amounting to commercial mining, which was not permitted under the Coal Mining Nationalisation Act.

According to the guidelines, the mining lease will be allotted only when there is evidence to show that the area has mineral contents that have been established. "To carry out mining operations… mining plan can be prepared only if mineralisation is established as 111 (proven mineral reserves), 121 (probable mineral reserves), 122 (probable mineral reserves) categories as per UNFC (United Nations Framework Classification) 1997," said the guidelines.

Mines Minister Narendra Singh Tomar said: "These measures are a step towards bringing transparency in the sector."

According to the ministry official, non-notified area is the biggest problem in allotting mining lease or prospecting licence. However, this has been addressed through the revised guidelines, which state there should be prior notification of all the areas available for mineral concession. If the state government fails to notify the area, "the central government will consider the proposal only if strong and compelling reasons for not notifying the area is indicated by the state government, which is demonstrated to exist".

"This, in a way, means we will not entertain non-notified areas," said a source.

The guidelines also state that once the government gives prior approval to a proposal for granting a prospecting licence or a mining lease, the state government should issue the grant order within a month.

"This should be done without any delay, preferably within one month of receipt of prior approval from the Central government. Delays in execution of mineral concessions agreement should be avoided," the guidelines noted.