Profit sharing clause to stay in reworked mining law draft

After much deliberations and contemplations by a high-level committee on natural resources, the mines ministry has decided to rework some clauses in the draft amendment to the Mines and Minerals (Development and Regulation) Act. But it will retain the profit sharing clause despite the committee’s initial suggestions that it was not a prudent move.

It plans to introduce restricted auctioning for minerals and eliminate the public sector’s reservation in grant of mineral concessions. It has succeeded in creating consensus among state governments on these changes and plans to put the new draft before a group of ministers (GoM) on July 7

PROFIT SHARING
The 10-member ministerial panel, headed by finance minister Pranab Mukherjee, is unanimous on putting in place a compensation regime under which miners will have to shell out 26 per cent of their profits for the benefit of project-affected families. The clause has been opposed tooth and nail by the private sector lobby.
 

REWRITING JOB

* Mines ministry to rework some clauses in the draft amendment to the Mines and Minerals (Development and Regulation) Act

* Plans to introduce restricted auctioning for minerals

* Plans to eliminate the public sector’s reservation in grant of mineral concessions

* One change relates to giving state governments additional regulatory and technical powers to conduct and manage competitive bidding process

* The other change recommended by the Chawla panel is to allow the Geological Survey of India (GSI) to outsource baseline data generation for exploration of minerals to private experts

* This will help ease the load on GSI and aid in mineral exploration

The opposition ranges from rendering mining projects unviable and questions over the efficacy of the move in helping the locals to the institutional difficulties in putting in place the compensation regime.

AUCTIONING OF MINERALS
In the original draft, the ministry had recommended auctioning of mineral concessions on the basis of the Hoda committee’s report in 2007. While it had intended to keep auctioning restricted to the mining lease (ML) stage, the Chawla panel on natural resources wanted bidding to be extended to all the stages of mining — reconnaissance licence (RL), large area prospecting licence (LAPL), prospecting licence (PL) and ML.

“The current position, based on the GoM meetings held so far and the Chawla panel’s comments, is that auctioning will be limited to PL and ML only. We are on similar grounds with the Chawla committee now,” said a senior ministry official. “A final meeting of the GoM is necessary to approve these changes made in the draft in light of the Chawla panel’s recommendations,” he added.

STRENGTHENING STATES’ CAPACITY
One of the two changes made in the draft Bill, based on the Chawla committee’s recommendations, relates to giving state governments additional regulatory and technical powers to conduct and manage competitive bidding process. “Currently, state mining directorates are poorly equipped to do an assessment of mineral valuation on which bidding regime will be based. The new bill gives states more powers for this. The primary role of states will no more be only revenue collection. They will regulate the mining sector,” said the official.

The other change recommended by the Chawla panel was to allow the Geological Survey of India (GSI) to outsource baseline data generation for exploration of minerals to private experts. The move will help ease the load on GSI and aid in mineral exploration.

INDEPENDENT REGULATOR
Another major change brought in the bill is setting up of an independent regulator for the sector, separate from an Appellate Tribunal with quasi-judicial powers, a recommendation of law minister Veerappa Moily. The ministry had originally intended to keep both functions with the Appellate Tribunal.