India’s Union Cabinet has recently approved an ordinance that amends the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015. This move aims to attract more investment in coal mining and is set to overhaul the sector in significant ways.
Mines and Minerals Acts
The Mines and Minerals (Development and Regulation) Act, 1957, governs the mining sector in the country, providing comprehensive details about obtaining and granting mining leases for operations. The Coal Mines (Special Provisions) Act, 2015, on the other hand, stipulates allocation of coal mines and transfers right, title and interest over land and mine infrastructure along with mining leases to successful bidders. This act is aimed at maintaining continuity in coal mining operations and coal production.
Key Amendments and Impacts
A key outcome of the amendment is that the coal mining sector is now open to any company registered in India, allowing a potential influx of numerous new players. Prior to this change, only firms engaged in iron & steel, power coal washing sectors were eligible for auctioning of coal and lignite mining licenses by the government.
Foreign Direct Investment
The amendments are also set to attract foreign direct investment into the sector. With foreign investment, India could gain access to advanced underground mining technology utilised by global miners. This move is expected to bring an end to state-run Coal India Ltd’s monopoly in the sector.
Coal Production
Through these changes, the government aims at higher participation in commercial coal mining and targets coal production of 1000 Million Tonnes (MT) by Financial Year 2023 -24 from 730 MT in 2018-19.
Import Substitution and Enhanced Competitiveness
Strengthening domestic coal production might lead to the substitution of coal imports worth Rs 30,000 crore. It is ironic that despite having the world’s fifth largest coal reserves, India still imported 235 million tonnes (mt) of coal in 2019. Additionally, with cheaper inputs, the steel industry could see increased competitiveness.
| Coal Type | Carbon Content (%) | Found In |
|---|---|---|
| Anthracite | 80-95 | Jammu and Kashmir |
| Bituminous | 60-80 | Jharkhand, West Bengal, Odisha, Chhattisgarh, Madhya Pradesh |
| Lignite | 40-55 | Rajasthan, Lakhimpur (Assam), Tamil Nadu |
| Peat | <40 | Varies |
Regulation and Ownership
State Governments own the minerals found within their boundaries, while the Central Government owns minerals under the ocean within the territorial waters or Exclusive Economic Zone of India. The State Governments grant mineral concessions for all minerals located within their boundary under the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960. However, approval from Central Government is necessary for mining minerals specified in the First Schedule to the Act, which includes coal and lignite.