Home / News / India /  Caps for smaller mining areas to attract more investors

NEW DELHI : The Union government is preparing to set out area caps for mining as it aims to carve out smaller mining areas to attract more investors, two people aware of the development said. The move will also prevent vast tracts of land irregularly ending up with a few miners, which would undermine the very purpose of auctioning mineral concessions through a fair and transparent mechanism.

All states will have to follow the area limits for various minerals including iron ore, diamond, bauxite, gold and copper while auctioning resources, and changes would require permission from the Centre.

Depending on the kind of mineral mined, states can set aside 25-400 sq. km for a prospecting licence (PL), and 10-25 sq. km for a mining lease (ML), said one of the two persons quoted above, both of whom spoke on the condition of anonymity. The changes will be made through an amendment of the Mines and Minerals (Development and Regulation) Act, 1957.

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In the mining process, the government first identifies large areas that could have probable mineral reserves, and offers them to companies for initial testing. Once the probable mineral resource is established, a PL is given, where licensees get to do more exploration to establish possible mineral resource. Then, they apply for an ML for a particular area to extract the resource. Essentially, PL is granted for undertaking “prospecting operations" to explore, locate or prove mineral deposits, while ML is granted for the actual mining operation.

A query sent to the mines ministry remained unanswered till press time.

The government is looking to fix area restriction in the legislation itself to give stability to area limits and avoid the need for frequent amendments. Smaller mineral areas are expected to attract more investors and boost mineral production.

Also, such limits may aid the growth of the mining industry, where large-scale sustainable production is an imperative along with equitable distribution of resources.

The limits will not apply to earlier PLs and MLs, and where letter of intent upon auction has been issued, or reservation of mineral areas have been made. Such contracts will continue till the expiry of concession period, but any new concessions must follow the new area limits.

The limits were finalized based on the recommendations of a mines ministry committee led by the director general of Geological Survey of India with experts from the Indian Bureau of Mines.

While PL area limits for bauxite, gold and associated minerals and limestone has been kept at 50 sq. km, ML limits has been kept at 20 sq. km, 10 sq. km and 25 sq. km respectively. For diamond, the PL area limit has been fixed at 400 sq. km for all states, ML could be given a lot smaller area of just 10 sq km.

The are limits for iron ore has two sections – one for Odisha that has large contiguous resource-bearing areas and the rest of the country. So, while iron ore PL for Odisha is a tad higher at 50 sq. km, for other states, the limit is kept at 25 sq km. The iron ore ML area limit is also 20 sq. km against 10 sq. km for other states.

For atomic minerals and others like coal, chromite, manganese the PL limit will be 25 sq. km while ML will be given only for 10 sq. km.

Under existing Section 6 of MMDR Act, the limit is 10,000 sq. km for reconnaissance permit (RP), 25 sq km for PL and 10 sq km for ML. The section also empowers Centre to increase these limits, which have been increased several times following requests by state governments especially for public sector units. The changes in area limits under this regulation, changed the same for new PLs and MLs and distorted the entire system. The amendment would attempt to change this.

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