Mines And Minerals (Development & Regulation) Amendment Bill, 2023

Policy Update
Geetam Acharya

Introduction

The Parliament of India has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 for making amendments to the Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as ‘the Act’). The Bill was passed by the Lok Sabha on 28.07.2023 and the Rajya Sabha on 02.08.2023. The Mines and Minerals (Regulation and Development) Act (1957) is an Act of the Parliament of India enacted to regulate the mining sector in India. This act applies to all minerals except minor minerals and atomic minerals. It details the process and conditions for acquiring a mining or prospecting license in India.

History of the Act

The Act regulates the mining sector. For regulation, the Act classifies mining-related activities into:

reconnaissance, which involves a preliminary survey to determine mineral resources,
prospecting, which includes exploring, locating, or proving mineral deposits, and
mining, the commercial activity of extraction of minerals.

The MMDR Act, 1957 was amended in 2015 to introduce auction-based mineral concession allocation for transparency, create a District Mineral Foundation (DMF) for the welfare of affected communities, establish a National Mineral Exploration Trust (NMET) to promote exploration, and impose stricter penalties for illegal mining.

The Act was further amended in 2016 and 2020 to address specific emergent issues and was last amended in 2021 to bring further reforms in the sector, such as removing the distinction between captive and merchant mines, etc.

Functions

The Mines and Minerals (Development and Regulation) Amendment Bill, 2023. The worldwide focus on critical minerals introduces major reforms in the mining sector which include:

Omission of 6 minerals from the list of 12 atomic minerals specified in Part-B of the First Schedule of the Act, namely, Lithium bearing minerals, Titanium bearing minerals and ores, Beryl and other beryllium bearing minerals, Niobium and Tantalum bearing minerals, and Zirconium-bearing minerals.
Empowering the Central Government to exclusively auction mineral concessions for critical minerals specified in Part D of the First Schedule of the Act. Revenue from these auctions will accrue to the concerned State Government.
Introducing exploration license for deep-seated and critical minerals

Amendments in Detail

Omission of 6 minerals from the list of 12 atomic minerals specified in Part-B of the First Schedule of the Act: Mining and exploration of atomic minerals specified in Part-B of the First Schedule of the Act is only being done through PSUs. Hence, exploration and mining of these minerals is very limited. There is a need to vigorously increase exploration and production of the minerals proposed to be removed from the list of atomic minerals to meet the growing demands of the country wherein involvement of the private sector can be a force multiplier. The Bill provides to remove certain minerals from the list of atomic minerals, viz. minerals of lithium, beryllium, titanium, niobium, tantalum and zirconium are technology and energy critical having use in space industry, electronics, technology and communications, energy sector, electric batteries and are critical in net-zero emission commitment of India.Upon removal of these minerals from the list of atomic minerals, exploration and mining of these minerals will be open to private sector. As a result, exploration and mining of these minerals is expected to increase significantly in the country.
Empowering Central Government to exclusively auction mineral concessions for certain critical minerals: Another major amendment passed by the Parliament is to empower the Central Government to exclusively auction mining lease and composite license for certain critical minerals viz. molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, platinum group of elements, minerals of “rare earth” group (not containing Uranium and Thorium); fertilizer minerals such as potash, glauconite and phosphate (without uranium) and minerals being removed from the list of atomic minerals. Only 19 blocks of minerals have been auctioned so far by the State Government viz. graphite, nickel and phosphate out of 107 blocks handed over to the various State Governments.Even though auction would be conducted by the Central Government, the mining lease or composite license for these minerals to the successful bidders will be granted by the State Government only and the auction premium and other statutory payments shall continue to be received by the State Government.
Introducing exploration license for deep-seated and critical minerals: The Bill introduces provisions for grant of a new mineral concession, namely, Exploration Licence (EL), in the Act. The exploration license granted through auction shall permit the licensee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals mentioned in the newly proposed Seventh Schedule to the Act. These minerals are copper, gold, silver, diamond, lithium, cobalt, molybdenum, lead, zinc, cadmium, elements of the rare earth group, graphite, vanadium, nickel, tin, tellurium, selenium, indium, rock phosphate, apatite, potash, rhenium, tungsten, platinum group of elements and other minerals proposed to be removed from the list of atomic minerals. Preferred bidder for exploration license shall be selected through reverse bidding for share in auction premium payable by the mining lease (ML) holder. Bidder quoting lowest percentage bid shall be preferred bidder for exploration license. This amendment is expected to provide a conducive legal environment for attracting FDI and junior mining companies in the country.The blocks explored by the Exploration Licence holder can be directly auctioned for mining lease, which will fetch better revenue to the State Governments. The exploration agency would also benefit by getting a share in the auction premium payable by the lease holder.

Emerging Issues

However, the mineral sector required certain reforms, particularly for increasing exploration and mining of critical minerals that are essential for economic development and national security in the country. The lack of availability of the critical minerals or the concentration of their extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies. The future global economy will be underpinned by technologies that depend on minerals such as lithium, graphite, cobalt, titanium, and rare earth elements. Critical minerals have gained significance given India’s commitment to energy transition and achieving net-zero emissions by 2070.

In January 2015, after the ordinance was signed, a mining industry lobby group Society of Geo-scientists and Allied Technologists (SGAT) said that the prospecting-cum-mining was useless as no one would apply for such a license unless they had found a proven reserve by prospecting first.

Way Forward

The mining industry plays a crucial role in the country’s economy, serving as the backbone for the manufacturing and infrastructure sectors. According to the Ministry of Mines, the total value of mineral production (excluding atomic and fuel minerals) during 2021-22 amounted to Rs 2,11,857 crore.

India ranks 4th globally in terms of iron ore production and is the world’s 2nd largest coal producer as of 2021. In 2023, the mineral’s demand is likely to increase by 3%, driven by expanded electrification and overall economic growth in India. India holds a fair advantage in production and conversion costs in steel and alumina. Its strategic location enables export opportunities to develop as well as fast-developing Asian markets.

The Supreme Court bench of nine members ruled that taxation powers on minerals and ores are the exclusive domain of state governments. However, Parliament can impose an upper bar to limit the taxation by states. The MMDR Act has nothing to do with tax collection by the Union. It also ruled that royalty, which is in the domain of states, is not a tax.

References

About the Contributor: Geetam Acharya is a Research Intern at IMPRI and an undergraduate student at Sri Venkateswara College, University of Delhi with a keen interest in Political Science and International Relations.

Acknowledgement : The author would like to thank Dr Arjun Kumar, Vaishali Singh, Aasthaba Jadeja, Lakshita Singh, Hrishmita Shah who helped me throughout this article and reviewing the same.