Lok Sabha passes MMDR amendment Bill allowing auction of lithium, others to pvt sector

New Delhi: The Lok Sabha on Friday passed the Mines and Minerals (Development and Regulation Amendment) Bill, 2023, which seeks larger participation of the private sector in mineral exploration and production, including that OF sought-after lithium.

The Bill brings lithium out from the list of restrictive atomic minerals which require mining grants from the Centre with only government companies given licences. The amendment would allow auction of this critical mineral, used extensively for making batteries for electric vehicles.

It proposes to bring eight of 12 atomic minerals, including lithium bearing minerals, zirconium bearing minerals, beach sand minerals, titanium bearing minerals, minerals of rare earth group containing utanium and thorium, into a new category - critical and strategic minerals. The Centre will have the power to give concessions for these minerals to both public and private mining companies.

The Bill empowers the central government to exclusively auction mining lease and composite exploration licence for certain critical high value minerals such such as gold, silver, platinum, copper.

Union minister for Coal and Mines Pralhad Joshi had introduced the Bill by a voice vote in Lok Sabha on Wednesday amid Opposition protests against the Manipur issue.

The Bill also dispenses with cumbersome forest clearances for mine reconnaissance and prospecting operations, making it easier for private firms to participate in exploration of the country’s mineral resources..

Changes in mining legislation are being brought to make mineral exploration and production more attractive for investors.

The reform proposals in the legislation include allowing states to grant composite mineral licence without having to get a central nod. This is expected to enable state governments to put up blocks for auction for at faster pace. It will also raise and fix mineral-wise maximum area limits for mineral concessions to provide larger and economic mines to investors.

According to people aware of the development, the proposal on a single exploration licence has been inserted in Bill to promote specialized mineral exploration companies for reconnaissance and prospecting of mineral resources and earn revenue from its discovery after the mine is put to auction.

At present the MMDR Act provides for grant of two types of minerals concessions to private entities through auction, including mining lease for undertaking mining operations and composite licence for undertaking prospecting operations followed by mining operations. There is no provision for grant of a mineral concession for undertaking full range of exploration starting from reconnaissance to prospecting operations.

The legislation has also raised and fixed mineral-wise maximum area limits for mineral concessions. Accordingly, for prime mineral such as iron ore, the maximum area for prospecting licence and mining lease has been doubled to 50 sq km and 20 sq km, respectively. This would allow private entries to get same land area for mining as was earlier being given to government companies and that also by the state governments itself without any need for central approval.

Among the other changes, the Centre has decided to exclude duties and levies (ex-mine price) such as GST, export duty, royalty, District Mineral Foundation (DMF), National Mineral Exploration Trust (NMET) while calculating Average Sale Price (ASP) of minerals. This will restrict charge of royalty over royalty and limit tax burden on companies and improve realizations for the government in mineral concession auctions.

The changes on sale of minerals from captive mines has also been provided to do away with the existing provision where sale of 50% of minerals can commence only after the need of end use plant is meant. This provision was impacting development of mining operations as companies where end use plants were shut or still under development could not mine minerals and extraction of minerals got delayed.