Ministry seeks Cabinet nod for mining law amendments

Industry groups may be disappointed over benefit-sharing norms.

The ministry of mines has sought clearance from the Cabinet for making amendments to the existing mining legislation. Besides introducing a benefit-sharing regime for the first time, the proposed law will also be making provisions for regulating mining in the country. The forward movement of the Bill, coming within two months of its approval by a key ministerial group, is likely to disappoint industry groups that were expecting a relaxation in benefit-sharing provisions.

“We sent the finally approved version of the Bill to the Cabinet last week. The Bill includes all the provisions as approved by the Group of Ministers (GoM). It is expected to be introduced in the next parliamentary session,” a senior official from the mines ministry told Business Standard.

The Mines and Minerals Development and Regulations Bill of 2010 is seen by experts as a watershed legislative reform in the country’s mineral sector and will also have far-reaching implications for issues related to tribal compensation and resettlement and rehabilitation, apart from fine-tuning corporate practices. “No last-minute objections were received from any quarter on the provisions. The proposals for benefit sharing and introduction of auctioning for mineral concessions were retained,” the official said.

A 10-member GoM headed by Finance Minister Pranab Mukherjee had in July recommended mandatory sharing of 26 per cent of profit by coal miners with local people affected by mining operations as compensation. Corporate bodies mining non-coal minerals like iron ore would have to shell out a compensation amount equal to last year’s royalty.

The move was protested tooth and nail by corporate entities who argued that the “prohibitive” decision would hit the domestic mining industry by an estimated Rs 15,000 crore every year. Notably, the outgo accounts for a mere 7.5 per cent of the overall Rs 2 lakh crore worth of minerals produced in the country last financial year.

Industry chambers Ficci and Assocham had made separate presentations to Prime Minister Manmohan Singh in July complaining that the new law would impact the coal mining sector by Rs 2,800 crore and the non-coal sector by Rs 12,200 crore annually.

“It would also impede the flow of foreign direct investment and would leave no employable funds for companies,” Ficci had said. The new law will also introduce auctioning for grant of Prospecting Licence and Mining Lease — the last two of the four stages of mineral development.

In the initial two stages, Reconnaissance Licence and the newly introduced Large Area Prospecting Licence would be granted on a first-come-first-served basis, as opposed to the Chawla Committee’s recommendation of introducing auctioning for grant of licences at all stages.