Now, auctioning the only way to give out mining rights

Ordinance was needed for addressing issues arising out of Supreme Court judgment, says govt

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The Union government on Monday promulgated the Mining & Mineral Development Regulatory (MMDR) Amendment Ordinance, 2015.

With this, certain key provisions of the MMDR Act of 1957 stand changed, even without an Act of Parliament. As already reported, the Cabinet had cleared it last week.

“In the past few years, the number of new mining leases granted has fallen substantially,” went an explanatory statement from minister Narendra Singh Tomar’s office.

Second and subsequent renewals had also been affected by court judgments, it said. As a result, the sector’s output has come down drastically, leading to import of minerals by users.

Under the new law, state governments would grant mineral concessions through auctions. “This should also mean the government will get an increased share from the sector,” went the statement. In notified minerals – bauxite, iron ore, limestone and manganese ore - the normal process will be direct auction of the mining lease (ML). When mineralisation has not been established and prospecting is required, the auction of a prospecting lease (PL)-cum-ML can be done with prior approval of the central government.

In the case of non-notified minerals, a PL-cum-ML would be auctioned. Where mineralisation is established, a direct ML would be given through auction.

State governments, however, can award leases to state-owned companies without going through the auctioning process in the areas reserved for these. Such government firms  can enter into a joint venture with other entities, provided it retains more than 74 per cent in the venture and the private partner is selected through bidding.

To improve valuations of leases, it will be possible to transfer ML and PL-cum-ML leases awarded through auction by approval of the state government. Where the latter does not convey any decision in 90 days, it would be taken as deemed approval.

Unlike in the 1957 Act, there would be no renewal of any mining concession, though the tenure of any stands increased from the existing 30 years to 50 years. The ML would be put up for auction thereafter. The government acknowledged the industry has been aggrieved due renewals kept pending. “In fact, this has led to closure of a large number of mines,” said the statement.

The ordinance provides that MLs would be deemed to be extended from the date of their previous renewal to end-March 2030 in the case of captive miners and till end-March 2020 with merchant miners. If the renewal has already been granted and its time period completion is later than the mentioned dates, that would be considered valid.

“Thus, no ML holder is likely to be put into any disadvantaged condition. It is expected that this would immediately permit such closed mines to start their operations,” said the government.

To encourage exploration, the ordinance proposes to set up a National Mineral Exploration Trust. Funding will come from the leaseholders, to pay a sum equivalent to two percent of the royalty paid to the government.

More, other organisations – public or private - notified for this purpose by the central government can also do prospecting now, without any licence. “But such organisations will have no other rights whatsoever,” said the government.

It has also made clear that a lease would be cancelled if the holder does not start mining within two years from the date of the lease or is not able to continue mining for two years after the mining operations have started.

The ordinance also has a provision to establish a District Mineral Foundation (DMF) where mining takes place. “Other than royalty, leaseholder will pay an additional amount of one-third of the royalty (maximum limit) to the DMF,” said the government.

NEW RULES

• Government to grant mineral concessions only through auctions
• Concession period to be 50 years instead of 30 years, no renewals to be given thereafter
• For pending renewal applications, extension of lease till March 31, 2030, for captive miners and till March 31, 2020, for merchant miners
• Formation of National Mineral Exploration Trust; leaseholders to pay a sum equivalent to 2% of the royalty paid to the government
• Formation of District Mineral Foundation; leaseholder will pay an additional amount of a third of the royalty (maximum limit) to the trust
• Mining leases awarded through auction can be transferred after the state government’s approval
• Government company can enter into joint venture with any company, on the condition that it will hold more than 74% stake in the venture