New way to allocate mines--auctions

We have abundance of minerals, question is who would mine them.And now a more new manner has been found. On March 20,2015, it was ruled that auction would be held to allocate mines.Auction would be the only way of obtaining mines of minerals

Both Houses of Parliament Pass the Mines and Minerals (Development and Regulation) (Amendment) Bill

Parliament has passed the Mines and Minerals (Development and Regulation) (Amendment) Bill, 2015 today.  This Bill amends certain provisions of the MMDR Act, 1957. The Amendment Bill, 2015, became necessary to address the emergent problems in the mining industry. In the last few years, the number of new Mining Leases granted in the country has fallen substantially. In addition, second and subsequent renewals have also been affected by certain Supreme Court judgements. As a result, the output in the mining sector has come down drastically, leading to import of minerals by users of those minerals. The salient provisions of the Amendment Bill are as follows:

Removal of discretion: auction to be sole method of allotment

The Amendment removes discretion in the grant of mineral concessions. All mineral concessions are granted by the respective State Governments. They will continue to do so but all grants of mineral concessions would be through auctions, thereby bringing in greater transparency and removing discretion. This should also mean that the Government will get an increased share from the mining sector. Unlike in the 1957 Act, there would be no renewal of any mining concession. The tenure of mineral concessions has been increased from the existing 30 years to 50 years. Thereafter, all Mining Lease would be put up for auction (and not for renewal as in the earlier system).

Impetus to the mining sector

Continued operations in the mining industry have been affected due to the pendency of applications for second and subsequent renewals.  In fact, this pendency has led to closure of large number of mines. The Amendment Bill, 2015 addresses this issue also. To provide a transition to the new system, Sub-Sections (5) and (6) of Section 8A of the Amendment Bill have been included by which Mining Leases would be deemed to be extended from the date of their last renewal upto 31^st March, 2030 (in the captive miners) and till 31^st March, 2020 (for the merchant miners) or till the completion of the period of renewal already granted, if any, whichever is later.   It is expected that this would immediately permit mines that have got closed due to want of decisions on their applications for second and subsequent renewals to start their operations, subject to the necessary clearances like forest and environment.

Safeguarding interests of affected persons

The Amendment Bill makes it mandatory to establish a District Mineral Foundation (DMF) in all districts where mining takes place. This is designed to address a long time grievance of civil society that people affected by mining are not cared for.   Contribution to the DMF of an amount not exceeding one-third of the royalty rate in so far as new concessions to be granted by auction are concerned and not exceeding the royalty in respect of existing concessions has been provided for. The Bill also makes it mandatory for State Governments, while framing rules to give effect to the DMF, to conform to the provisions of such Acts as the Panchayats (Extensions to Scheduled Areas) Act, 1996, Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 as well as provisions of the Constitution relating to Fifth and Sixth Schedule areas.

Encouraging exploration and investment

Indian mining industry has not seen the type of exploration as in other countries. To address this, the Amendment proposes to setup a National Mineral Exploration Trust created out of contribution from the mining lease holders. This would allow the Government to have a dedicated fund for undertaking exploration. In addition, the transferability provision (in respect of Mining Leases to be granted through auction) would permit flow of greater investment to the sector and increasingefficiency in mining.

Simplification of procedures and avoidance of delay

In respect of ten minerals in Part C of First Schedule (like iron ore, manganese, bauxite, copper, gold, etc.), State Governments needed to obtain the prior approval of the Central Government before grant of mineral concessions. The Amendment removes the need for such “prior approval” from the Central Government, thereby making the process quicker and simpler. Similarly, approval of mining plan by the Government would no longer be mandatory as a proviso has been added under Section 5(2)(b) permitting the State Governments to devise a system for filing of a mining plan obviating need for prior approval by the Government.

Stringent provisions against illegal mining

All offences under the Act will now be subject to a maximum punishment of 5 years imprisonment or fine of Rs. 5.00 lakhs per hectare.  State Governments are also empowered to set up Special Courts for speedy trial of offences under the Act.

The salient provisions of the Amendment Bill are as follows:

Ø  All mineral concessions will be granted only through auction {Sections 10 B &11}.

Ø  Direct auction for mining leases for bulk minerals; auction of prospecting licences-cum-mining leases for deep-seated minerals {Sections 10 B & 11}.

Ø  Uniform lease period of 50 years; no renewals; auction at the end of lease period; will solve problems arising out of SC judgments on second and subsequent renewals {Section 8 A}.

Ø  Transition period of minimum 15 years for captive mines and 5 years for other mines; no sudden stoppage as a result of the Amendment {Section 8 A (5) and (6)}.

Ø  All pending applications at State level (over 60 thousand) will abate except in a few cases where action is in progress/vested right exists {Section 10A}.

Ø  Central Government empowered to prescribe deadlines for various processes and to issue binding directions to States {Section 20 A}.

Ø  Central Government to frame separate rules for atomic minerals {Section 11 (B)}.

Ø  The previous approval of the Central Government will not be required for grant of mineral concession except for Atomic Minerals {Amendment to Section 5(1)}.

Ø  Enabling powers for reservation for the public sector to continue {Section 17 A}.

Ø  Higher penalties and jail terms for offences; special courts may be constituted, if necessary {Amendment to Section 21(1) & (2)}. .

Ø  District Mineral Foundation to take care of people and areas affected by mining {Section 9 (B)}.

Ø  National Mineral Exploration Trust to be set up for impetus to exploration {Section 9 (C)}.

Ø  Easy transferability of concessions obtained through auctions so as to attract private investment and FDI {Section 12 (A)}.

Ø  Powers to Central Government to intervene even where State Governments do not pass orders within prescribed time lines; this will eliminate delay {Section 30}.