The Indian Ministry of Mines recently announced a notification about the Minerals (other than Atomic and Hydro Carbons Energy Mineral) Concession (Fourth Amendment) Rules, 2021. This amendment serves to update the Minerals (other than Atomic and Hydro Carbons Energy Mineral) Concession Rules, enacted in 2016 [MCR, 2016].
Key Points of Amendments
This new amendment introduces several important changes that impact mineral production and distribution in India.
Firstly, the sale of minerals from captive leases has been significantly altered. The new rules now allow for the sale of 50% of minerals produced by captive mines, facilitating additional minerals’ entry into the market and leading to greater use of these mine’s capacities.
A captive mine refers to any mine producing coal or a mineral exclusively for use by the company that owns it. In contrast, non-captive mines produce and sell the fuel.
The second change to the rules concerns the disposal of overburden (OB). This change allows for the disposal of overburden/waste rock/mineral beneath the threshold value during the mining or beneficiation of the mineral. As a result, doing business will be easier for miners.
Adjusting Lease and Licensing Practices
Further, the minimum area for a mining lease grant has been revised downwards from 5 hectares to 4 hectares. However, certain specific deposits have a minimum provision of 2 hectares.
Moreover, part surrender of the mining lease area is now permitted in all cases. Prior to this amendment, part surrender was only allowed in instances of non-grant of forest clearance.
Transfer of composite licenses has also been amended, with provisions now allowing for the transfer of a composite license or mining lease for all types of mines.
The overarching objective of these amendments is to spur employment and investment in the mining sector, increase state revenues, boost production, accelerate the exploration and auction of mineral resources, and ensure time-bound operationalisation of mines.
Mining Sector in India
India holds significant advantages in the mining sector. It’s strategic location facilitates easy export to developing and fast-developing Asian markets. As of 2021, India is the world’s second-largest coal producer and ranks second in crude steel production globally as of 2020.
According to studies, India possesses mineral potential equivalent to that of South Africa and Australia, producing as many as 95 types of minerals. However, despite this vast mineral potential, India’s mining sector remains underexplored.
The mining sector’s contribution to the GDP of countries such as South Africa and Australia ranges from 7 to 7.5%, while it stands at only 1.75% in India. Notably, 11 states account for 90% of India’s total operational mines; these include Andhra Pradesh, Odisha, Chhattisgarh, Jharkhand, West Bengal, Maharashtra, Tamil Nadu, Gujarat, Madhya Pradesh, Rajasthan, and Karnataka.
Constitutional Provisions for Mining
In terms of constitutional provisions, entry no. 23 on the State List mandates state governments to own minerals located within their boundaries. Similarly, entry no. 54 on the Central List grants the central government ownership over minerals within the Exclusive Economic Zone of India (EEZ), including those extracted from the sea or ocean floors in India’s maritime zones like territorial waters, continental shelf, and exclusive economic zones.
Reform initiatives, such as the National Mineral Policy 2019 and the Atmanirbhar Bharat scheme, are contributing to faster operationalisation of auctioned greenfield mineral blocks, rationalisation of taxes in the sector, and increased private investments. The District Mineral Foundation Funds also plays a significant role in the sector.
The recent amendments, coupled with these strategic initiatives, reflect the future development trajectory of India’s dynamic mining sector.
