The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, recently passed by the Rajya Sabha, proposes significant reforms to the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957. This legislation has undergone several changes over the years, all aimed at improving mineral sector transparency, safeguarding affected communities, promoting exploration, and penalising illegal mining practices. The most recent amendments aim to facilitate the exploration and mining of Critical Minerals, vital for economic development and national security.
The History of MMDR Act
The MMDR Act, first instituted in 1957, underwent modifications in 2015 to introduce auction-based mineral concession allocation, create a District Mineral Foundation (DMF) for community welfare, establish a National Mineral Exploration Trust (NMET) to encourage exploration, and impose stricter sanctions on unlawful mining. It was modified again in 2016 and 2020 to respond to emerging issues and underwent its last amendment in 2021 to implement further reforms, including eliminating the distinction between captive and merchant mines.
The Need for More Reforms in the Mineral Sector
Despite these reforms, further changes are necessary, particularly concerning the exploration and mining of Critical Minerals. The availability of such minerals is limited, and their extraction or processing is restricted to a few geographical locations, potentially causing supply chain vulnerabilities and disruption of supplies. Given India’s commitment to energy transition and achieving Net-Zero emission by 2070, Critical Minerals have gained significance.
Key Provisions of the Amendment Bill
This bill proposes several crucial changes to the original Act. One significant change allows private sectors to mine six out of 12 atomic minerals: lithium, beryllium, niobium, titanium, tantalum, and zirconium. Once enacted into law, it would empower the Centre to auction mining leases and composite licences for critical minerals such as gold, silver, copper, zinc, lead, nickel, etc.
Another change is the process for granting exploration licenses. Previously done through competitive bidding by the state government, under the new Bill, the Central Government will determine the auction’s conduct, terms and conditions, and bidding parameters.
Changes in Activity Areas and Incentives
Under the current Act, a prospecting license permits activities in an area up to 25 square kilometres, and a single reconnaissance permit allows activities in an area up to 5,000 square kilometres. The new Bill allows activities within a single exploration license in areas up to 1,000 square kilometres. It also provides an incentive for exploration licensees; if the resources are proven after exploration, they will receive a share in the auction value of the mining lease for minerals prospected by them.
Background: The Mining Sector in India
The mining industry is vital to India’s economy, supporting manufacturing and infrastructure sectors. According to the Ministry of Mines, the total value of mineral production (excluding atomic and fuel minerals) during 2021-22 was Rs 2,11,857 crore.
India ranks 4th globally in terms of iron ore production, is the world’s 2nd largest coal producer as of 2021, and has the 2nd largest aluminium production. Combined with its strategic location, it holds export opportunities to rapidly developing domestic and Asian markets. Despite this, the mining industry contributes less to its Gross Domestic Product (GDP) in percentage terms. This discrepancy highlights the sector’s unrealised potential and the need for continued reforms.
Despite the adverse environmental impact, coal mining remains inevitable due to the sector’s economic contributions. However, in balancing development and environmental conservation, more sustainable practices must be implemented – another area where reforms such as those proposed by the recent Amendment Bill are necessary.
