Indian govt seeks public comments on mining reforms

The Mines Ministry has invited comments from the public on a series of structural reforms it proposes under Atmanirbhar Bharat to enhance private investments and generates employment in the mineral sector.

States had already been asked for their opinion, the general public has ten days or until 3 September 2020 to share its views on these 9 structural reforms to be introduced through an Amendment Bill.

1. Removing legacy issues of 10 A (2)(b) and 10 A (2)(c)
Government's intent to cancel more than 500 leases that had been spared by the absence of a sunset clause but never begun operation. The Niti Aayog had differed on this controversial move.

Continuing with the existing provisions of 10 A (2)(b) and 10 A (2)(c) will cause huge financial loss to the State exchequer, says the ministry. Removing these two sections will allow reallocation of such mineral blocks.

Hundreds of applicants who had failed to sign lease deeds before the 12th Jan 2017 deadline have gone to court blaming state governments for the delay. Companies such as Deccan Gold and Ramgad Minerals and Mining Company claiming rights under 10 A (2)(b) have said they too will litigate against any retrospective move denying them mining rights.

An authority to decide how much these legacy cases had spent on exploration - to be reimbursed from funds under the National Mineral Exploration Trust - is being proposed.

2. An easing of exploration level's for composite prospecting -cum-mining leases is proposed to attract private investment to develop partially explored deposits. The existing requirement is of a minimum of G3 (UNFC) level data for auction of composite leases is being eased to a more basic G4 level. Private entities are also being promised funding support from the The National Mineral Exploration Trust (NMET)fund.

This reflects on the government's inability to use its own exploration agencies such as GSI, MECL or DMGs effectively. "The time required to reach the prescribed level of exploration before putting a block to auction is not only long but is ridden with uncertainties," conceded the note. "Once enough regional exploration data is available for the country, mineral sector can also adopt open acreage licensing policy for allocation of mining rights," it added.

3. Removing distinction between captive and non captive
Captive mining results in sub-optimal mining, resulting in environmental hazard on account of heavy stock of un-usable extracted minerals lying at mine heads, says the note. On the lines of coal mines, all mineral blocks will be auctioned for commercial mining without distinction of captive or merchant mines.

The right of the first refusal available to existing captive mines could also be removed - a move that could impact companies such as Tata Steel who have invested in considerable downstream and social infrastructure around their mines. On the brighter side, steelmakers and other captive miners will be allowed to sell upto 50% of their ore in the open market, against the 25% allowed currently to mines acquired through auctions.

4. Developing a transparent National Mineral Index
A comprehensive and broad-based National Mineral Index for determination of levies and taxes, on the lines of the recently launched national coal index, is being offered in place of the existing IBM method of calculating an average sale price for calculation of royalty, DMF, and NMET. A committee will be set up to develop the National Mineral Index.

5. Redefining "illegal mining"
The Ministry proposes redefining illegal mining, to differentiate between illegal mining done outside leasehold area and mining in violation of various clearances and approvals inside a mining lease area. Odisha's iron ore miners paid a whopping Rs 17,000 crore for environmental violations within their leases. Similar demands have been made in other states and from other miners including Coal India. "The amendment will be prospective in nature," says the note. It is not clear whether this amendment of section 21 (4), section 21 (5) will free Coal India from its liability of Rs 53,331 crore.

6. Rationalisation of stamp duty
"Since the auctioned mines are leased on revenue sharing basis, which in essence makes the government a financial partner in the mine, so stamp duty should be computed on the extent of area, not on the value of mineral," says the Mines Ministry. The reform plans to address the practice of states like Odisha seeking a stamp duty on the highest grade of mineral and for the entire lease period of 50 years.

7. Freeing unused mineral blocks
The Ministry also proposes cancelling unused mineral blocks held by private companies and virgin areas by PSUs and bringing them into production. Rights, to deposits held by private companies and not worked for three years, will be vested back to the government. "Similarly, the virgin areas allocated to PSUs and are not brought into production are also proposed to be reviewed and vested back to State Government." PSUs such as Orissa Mining Corporation sitting on large number of unexploited deposits since decades could be impacted by this move.

Comments are to be sent to the director at the ministry at veena.kumarid@gov.in before 3 September 2020.

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