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Mining Bill lapses, sector avoids 'meltdown'

The future of the Bill will be decided by the next government

New Delhi 

The United Progressive Alliance's (UPA) attempt to overhaul the 50-year legislation governing the corruption-ridden mining sector has fallen through with the new mining Bill lapsing.

The Mines and Minerals Development and Regulation Bill had proposed sharing of miners' profits with the project-affected, among others, but with the Lok Sabha being dissolved, the Bill has lapsed.

Many from the sector are, however, heaving a sigh of relief. The sector was not happy with the provisions. The future of the Bill will be decided by the next government.

After years of deliberations, the Bill was tabled in the Lok Sabha in December 2011, and was then referred to the Parliamentary Standing Committee on Coal and Steel. The committee submitted its report in May 2013 with some 100 suggestions including doing away with a clause, which had mandated coal and lignite companies to share 26 per cent of their profit with local communities impacted by mining operations. In its stead, the committee suggested royalty paid during the financial year to the state government should be the basis for benefit sharing.

R K Sharma, secretary-general, Federation of Indian Mineral Industries, said, "The Bill was anti-mining. We are happy it did not come in the same form."

According to Kameswara Rao, leader (energy utilities and mining) at PwC India, the Bill was pending for so long that the number of issues moved ahead and it needs a re-look now. "We need to have stronger provisions for various issues such as contracting, trading, exploration and others. A lot of development has happened since the first draft of the new Bill. The Bill in the current shape would have been called inefficient."

The mining sector was opposed to the profit-sharing clause. Even the mines ministry was of the view that it had considered the option of 26 per cent of shares to the affected, but the proposal was found unfeasible due to the complexities involved in the distribution of shares and in calculation of profits.

According to Rao, the issue was not so much about profit-sharing but how efficiently it would be implemented. "Globally, all the core mining countries such as Australia, Canada, and South Africa have variants of such proposals, which are meant for local development," he noted.

A senior mines ministry official said it was impossible to study all the 107 suggestions made by the standing committee and incorporate them in the Bill in such a short span of time. "Decision-making had slowed down in the government as officials were wary," said the official.

For non-coal and non-lignite miners, the Bill had proposed payment of an amount equivalent to royalty paid by the firms to the state government. This recommendation was accepted by the Parliamentary panel. The collected money was proposed to be used for the welfare of the project-affected persons through a newly-created District Mineral Foundation (DMF).

The panel had recommended to bring DMF under the Comptroller and Auditor General of India (CAG) audit purview and increase the local community's representation in the DMF council.

The sector was also of the view that the new Bill would increase the tax outgo by up to 100 per cent. For bauxite, the tax outgo would be 110 per cent; for iron ore, it would be 55 per cent; and for coal, it would be 61 percent, according to industry chamber FICCI.

The new Bill also proposed giving full powers to the states in terms of extension and grant of mineral concession.

It also provided for allocating minerals concessions for all major minerals, except coal and lignite, mainly through the competitive bidding route.

Other big proposals included setting up of a National Mining Regulatory Authority for resolving issues in major minerals and setting up of a State Mining Regulatory Authority for issues in minor minerals. It also talked about creating national and a state-level mineral funds.


* The miners were opposed to the ‘profit-sharing with the project-affected’ in the Bill

* Kameswara Rao, leader (energy utilities and mining) at PwC India, says Australia, Canada, and South Africa have variants of such proposals, meant for local development

* R K Sharma, secretary-general, Federation of Indian Mineral Industries, says the Bill is anti-mining.

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First Published: Sat, March 08 2014. 23:16 IST