Economics Current

Mining Law

The Mineral Laws (Amendment) Bill, 2020 was introduced in Lok Sabha on March 2, 2020. The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act), and is expected to open a new era for the mining sector in India. 
 
The MMDR Act classifies minerals into three broad categories:
·hydro-carbons/ energy minerals (coal and lignite) 
·atomic minerals
·metallic and non-metallic minerals (iron-ore, lead, manganese ore, zinc, lead, gold etc.)
 
The aim behind the MMDR Amendment Act 2015 was to establish a transparent and non-discretionary regime for the grant of mineral concessions and redress the decreasing output of the mining industry. There was a fair amount of uproar regarding the restrictions on transferability of erstwhile concessions as this was a roadblock for acquisition of stressed assets and generally companies with mining concessions. To address this concern, the MMDR Act was further amended in 2016 to allow for transfer of mining leases that are granted other than through auction and used for captive consumption purposes. 
 
Recently, the government liberalised the mining sector and allowed 100% foreign direct investment under the automatic route for entities engaged in coal mining activities and sale of coal. To give effect to this change, the Mineral Laws (Amendment) Ordinance, 2020 (Ordinance) was promulgated on 10 January 2020, which amended the MMDR Act and the Coal Mines (Special Provisions) Act, 2015 (Coal Mines Act). 
 
The Amendment Act of 2020 amends the MMDR Act and the Coal Mines Act by introducing provisions similar to those contained in the Ordinance. Some of the major changes introduced by the Amendment Act of 2020 include:
·Eligibility for auction of coal and lignite blocks – the companies need not possess any prior coal mining experience in India in order to participate in the auction of coal and lignite blocks.
·Removal of restrictions on end-use of coal – the entities not engaged in the specified end use (power, steel, washing of coal etc.) could also bid for cancelled coal mines (specified in Schedule II and Schedule III of Coal Mines Act). 
·Transfer of statutory clearances to the new lessee – for minerals (other than coal, lignite, and atomic minerals), the various approvals, licenses, and clearances given to the previous lessee would be extended to the new lessee for a period of 2 years. However, the new lessee must obtain all the required clearances within this 2 year period.
·Grant of prospecting licence-cum-mining lease for coal and lignite blocks, which was earlier permitted only in respect of notified minerals.
·Reallocation after termination of the allocations - Act provides for the termination of allotment orders of coal mines in certain cases.  The Bill adds that such mines may be reallocated through auction or allotment as may be determined by the central government.  The central government will appoint a designated custodian to manage these mines until they are reallocated.



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