Mineral concession amendments to raise availability, ease pricing pressure

Major changes to mining industry include allowing part surrender of mines, permitting sale of up to 50% of minerals by captive owners and easy transfer of mines

In a bid to strengthen ease of doing business in the domestic mineral sector, the Centre has amended the Minerals Concession Rules, 2016, in a notification, introducing four major changes to the mining industry such as allowing part surrender of mines, allowing the sale of up to 50 per cent of minerals by captive owners and easy transfer of mines.

Effective November 2, 2021, these amendments will be called Minerals Concession (Fourth Amendment) Rules, 2021, said the Ministry of Mines notification.

In any lease, where the mineral is required to be used for captive purpose, the lessee may sell up to 50 per cent of total mineral produced in such captive mine in a financial year while ensuring that not less than 50 per cent of the total mineral produced in such captive mine shall be used during the financial year for meeting the requirement of the end use plant linked with the mine.

“This move will ensure better availability of the mineral in the open market and will take away a lot of pressure on production and pricing,” B K Bhatia, additional secretary general at Federation of Indian Mineral Industries (FIMI) told Business Standard.

 All major minerals are part of this amendment and hence iron ore, bauxite, limestone, zinc and manganese among others will benefit.

“Nearly 90 per cent of limestone mines are for captive mining. This move will benefit cement immensely,” said Bhatia.

Tata Steel, Hindalco Industries, Hindustan Zinc and UltraTech Cement among others are some of the large captive mineral producers in the country.

However, the lessee will have to pay an additional amount to the state government in the form of royalty. The amount to be paid is different for different minerals, said the notification.

With regard to surrendering of mines, previously miners were allowed to surrender mines entirely and part surrender was not an option. This led to a lot of inconvenience since the lessee sometimes did not choose to develop a section of the allotted mine perhaps due to it being a forest region etc. In the current amendment, the lessee will now be allowed to surrender even a part of this mine.

In case of transfer of mines, earlier procedure required the lessee to make some payments to the state government. However, going ahead transfer of mines can happen without any charges.

Alongside, the penalty on late payment of royalty has also been reduced to 12 per cent (of the royalty) from earlier 24 per

“Overall, these amendments are welcome by not just the consumer but also the industry,” said Bhatia of FIMI.