India: Supreme Court grants Centre 2 months to conclude MMDR Act amendments consultation

• SC urges final decision on average sale price calculation
  
  
• Move to benefit domestic pricing, global competitiveness
  
  

In a significant judgment, the Supreme Court of India has granted the Centre a period of two months from the date of pronouncement to conclude the public consultation process regarding proposed amendments to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act). This process was initiated through a notice dated 25 May 2022. The court directed that a final decision must be taken concerning the cascading impact of royalty on royalty in the calculation of the 'average sale price', which has been a contentious issue for industry stakeholders.

The court's intervention stems from challenges regarding the validity of the explanations appended to Rule 38 of the Mineral Conservation and Development Rules (MCR), 2016, and Rule 45 of the Mineral Conservation and Development Rules (MCDR), 2017. These rules relate to royalty and pricing mechanisms within the mining sector. The apex court's decision underscores the need for greater clarity and effective stakeholder engagement to resolve issues that impact the mining and mineral sectors' operational frameworks.

The ruling noted that while the validity challenge to these rules has been resolved in accordance with their directions, the outcome of the ongoing consultation process will have far-reaching implications for mineral resource management, royalty structures, and pricing norms.

The court has further instructed that the Registry must notify this matter to an appropriate Bench within two months to ensure compliance and necessary follow-ups with the directives issued.

This decision was pronounced by Chief Justice Dhananjaya Y. Chandrachud, along with Justices J.B. Pardiwala and Manoj Misra, and reflects the judiciary's commitment to addressing critical issues in the mining sector while fostering transparency and inclusivity in decision-making processes.

Context and implications

The cascading impact of royalty on royalty has been a longstanding concern within the mining industry, especially affecting the computation of costs and competitiveness. Industry stakeholders have argued that the cumulative impact leads to increased operational costs, affecting domestic pricing and global competitiveness of Indian mineral resources.