Centre sets stage for mining reforms

New Delhi: The government plans to ease the process of composite exploration licences, smoothen mining clearances and relax the rules for captive mining, two people aware of the development said, outlining planned reform measures.

States may be allowed to grant composite exploration licences for high-value minerals such as gold, silver, platinum and copper, without seeking central permission. This is expected to enable states to put the blocks for composite licences in auction at a faster pace, the people cited above said on the condition of anonymity.

The Union cabinet has approved six key amendments to the Mines and Minerals (Development and Regulation) Act, 1957, and the bill is expected to be passed during the monsoon session. The amendment will also ease the forestry clearance process for mine reconnaissance and prospecting operations, making mineral exploration and production more attractive for private investors.

It will also raise and fix mineral-wise maximum area limits for mineral concessions to provide larger and economic mines to investors. “The prime aim of the amendments is to get more investments in the mining sector and allow the country to become self-dependent in several minerals and boost production,” one of the two people cited above said.

Queries sent to mines ministry remained unanswered till press time.

The proposal for a single exploration licence has been inserted in the amendment bill to promote specialised mineral exploration companies to do reconnaissance and prospecting of mineral resources and earn revenue from its discovery after the mine is put to auction for mining companies.

The law currently provides for grant of two types of minerals concessions -- mining lease for undertaking mining operations, and composite licence for prospecting operations followed by mining operations. There is no provision for grant of a mineral concession for undertaking full range of explorations from reconnaissance to prospecting operations. The government now proposes a composite exploration licence that will benefit standalone specialized mining companies, with a revenue share arrangement.

The amendment also raises and fixes mineral-wise maximum area limits for concessions. For prime minerals 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 the same land area for mining as was earlier being given to government companies, and that too without the need for central approval. The centre has also decided to exclude duties and levies (ex-mine price) such as GST, export duty, royalty, District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) while calculating Average Sale Price (ASP) of minerals. This will restrict the charge of royalty over royalty and limit tax burden on companies and improve realizations for the government in mineral concession auctions.

The amendment will also the scrap the provision barring captive mines from starting sales of 50% of minerals after the end use need is met. 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.

Another major restrictive provision was the need to get forestry clearance including forest diversion plan for mineral reconnaissance permit (RP) and prospecting licence (PL) even though the activity involves only a survey of the mineral bearing land before permission is given for commencement of any non forestry activities in forest areas. With amendment proposing no forestry clearance required for RP pr PL, the grant of such process could be hastened and mineral production could be boosted through faster exploratory exercise.

The reform initiative also brings lithium out from the list of restrictive atomic mineral where permission to mine could only be granted by the Centre to government companies. The amendment has now proposed to bring 8 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 would be empowered to give concessions for these minerals to both public and private sector mining companies.