Mining that matters

For a country like India, which has a massive mineral potential, to rely on imports to meet its energy requirements is an example of how policy formulations can either make or break a sector. The Mines and Minerals Development and Regulation Act (MMDR Act) was introduced in 1957 to develop and regulate India’s mining sector. However, what the sector saw over the next five decades was a toxic concoction of power and politics leading to its under-development and over-regulation. An opportunity to build a self-reliant and energy-sufficient nation was lost for several decades with the sector kept bound in the fetters of captive-mining and non-transparent allocation of blocks. The arbitrary manner of mining, limited exploration, and legacy issues placed the entire mining sector in the hands of few.

It was only in 2015 that we saw a transformation in the discretionary practices of exploration and mining, when the MMDR (Amendment) Act was enacted to introduce the auction of mineral blocks, including coal and lignite blocks, in India. However, for the unhealthy mining practices that continued for almost seven decades, bringing any reform was not a task devoid of challenges. Overpowering the apparent and latent challenges faced at every step of the way, the far-reaching Mining Reforms were brought in by amending the MMDR Act, 1957 in 2020, and further in 2021.

The reforms are aligned with India’s National Mineral Policy that aims to increase the country’s mineral production by 200 per cent.

One of the greatest ironies of India’s developmental strategy was that the sector that had a great potential to address the problems of the Indian economy and energy security was kept under a protectionist regime for the longest time. Our government has continuously attempted to bring the mining sector out of the shackles of the rigid policy framework by bringing these reforms.

Furthering the revolutionary Mining Reforms, the central government has notified the Mineral (Auction) Second Amendment Rules, 2021 and the Minerals (Evidence of Mineral Contents) Amendment Rules, 2021. With the amendment in Mineral Auction Rules, the earmarking of mines for end-use and reservation for captive purposes will end, ensuring more participation in the mining industry and a healthy and competitive bidding process. The provision for allowing miners to sell minerals in the open market and in the case of captive mines, permission to sell up to 50 per cent in the open market will bring a paradigm shift in India’s mining sector.

Adding a sunset clause in Section 10A(2)(b) of the MMDR Act, 1957 and ending legacy issues in the mining sector is one of the most significant reforms brought by amending these rules. This ground-breaking step will make approximately 500 blocks available with the states for auction, ensuring more mining, revenue generation for states, and more employment opportunities.

To improve the exploration regime and help India’s mining sector realise its Obvious Geological Potential, these amendments will further ease the exploration requirements. A new group of minerals called “surficial mineral” has been formed — including limestone, iron ore, bauxite, and coal and lignite. Exploration norms for these minerals have been reduced from the existing G2 level to the G3 level for grant of mining lease (ML).

For Composite Lease (CL), the exploration requirement has been further simplified from G3 to G4 level. This pioneering step will have a substantial impact on India’s mining sector, bringing up more blocks for exploration and auction. Reforms in the auction rules are set to be transformational for the entire auction process for granting ML and CL, making the process time-bound, efficient, sophisticated, and more transparent.
 

India’s mining industry is now aspiring to move ahead with an action plan to auction maximum mineral blocks in the approaching years. Subsequent to the notification of the amendments in the Mineral (Auction) Rules and Mineral (Evidence of Mineral Contents) Rules, the futuristic reforms have already started yielding positive results. The mines that are not made operational within three years are already in the process of re-allocation by the states concerned. Similarly, the greenfield mines with public sector undertakings (PSUs), which have not started production to date, are also being auctioned by the state governments. The financial years 2020-21 and 2021-22 have already seen great performance by the sector, owing to the reforms — as the amendments brought a large number of blocks for auction, and facilitated a transparent and time-bound auction process. As a result, 17 blocks have been auctioned, 27 fresh NITs have been issued and 103 NITs are in the pipeline for the coming months.

These mining reforms are also exemplary in taking forward the idea of “Sabka Saath, Sabka Vikas” as the reforms are focused on expanding participation, increasing production, and facilitating direct and indirect employment generation to the population in mineral-rich states. Advancing the Prime Minister’s vision of Atmanirbhar Bharat, these reforms will bring a paradigm shift in India’s mining sector as we know it, turning it from one of the most unyielding sectors to an advanced one.

The author is the Union Minister of Coal, Mines and Parliamentary Affairs, Govt of India