Analysis of The Mines and Minerals (Development and Regulation) Amendment Bill, 2023
- The exploration and mining of minerals in India have long been hindered by a complex process requiring multiple permits and licenses. To address this issue and promote ease of doing business in the mining sector, the Indian government has proposed amendments in 2015, 2016, 2020, and 2021 to the Mines and Minerals (Development and Regulation) Act. However, more reforms are needed to increase exploration and mining of critical minerals essential for India’s economic development and national security.
- The proposed amendment-2023 aims to suggest introducing exploration licenses for deepseated and critical minerals through auctions. Private companies can conduct reconnaissance and prospecting operations, encouraging private sector participation and exploration which are crucial for various industries and India’s commitment to achieving the decided target of net-zero emissions. Additionally, the proposed amendment is also being seen to increase domestic production, reduce import dependency, and bring advancements in strategic industries, making India more self-reliant and globally competitive in space, electronics, communications, energy, and electric batteries.
- Additionally, the government also intends to remove six minerals, including lithium-bearing minerals, from the list of atomic minerals through this amendment. It is expected that through these amendments, empowering the Central Government to exclusively auction mining leases and composite licenses for specific critical minerals will accelerate the auction process and enhance mineral production.
What is in the Bill? 1
- The proposed amendment in Section 3 & Section 4 of the principal act introduces the term “exploration license” to include reconnaissance and prospecting operations for specific
1 Bill No. 101 of 2023; THE MINES AND MINERALS (DEVELOPMENT AND REGULATION) AMENDMENT BILL, 2023
minerals listed in the 7th Schedule of the Bill. Additionally, the term “exploration license” is also added in the amendment alongside the “composite license.” The exploration license which has been proposed in the amendment is a license granted for undertaking reconnaissance operations or prospecting operations or both in respect of minerals specified in the 7th Schedule.
- The definition of “reconnaissance operations” will also be expanded to cover preliminary prospecting activities like regional, aerial, geophysical, or geochemical surveys, geological mapping, pitting, trenching, drilling, and sub-surface excavation. The bill allows private companies to undertake mineral exploration and mining through the provision of an exploration license.The main objective of these amendments is to attract more investments in the mining sector and promote self-reliance in crucial minerals through the Inclusion of “exploration licenses” in the amendment
- The proposed amendments to Section 6 of the principal Act include changes to the maximum area for which a mineral concession may be granted.The new amendment allows for the issuance of one or more exploration licenses covering a total area of more than five thousand square kilometers,provided that the area granted under a single exploration license does not exceed one thousand square kilomenters.
- The proposed amendment changes the title of Chapter III in the principal Act to “Procedure for obtaining mineral concession in respect of land in which the mineral vest in the government.”This amendment signifies a shift in focus towards outlining the process and guidelines for obtaining mineral concessions in areas where the government owns and controls the minerals. It aims to provide clarity and specific procedures for acquiring mineral rights from the government for such lands.
- The new sections 10BA and 11D have been inserted into the principal Act to streamline the process of granting exploration licenses and mining leases for specific minerals by introducing competitive auctions and giving the Central Government a role in conducting the auction process. The inclusion of these sections in the Mines and Minerals Act is expected to bring about positive changes in the mining sector. It can lead to better resource management, increased revenues for state governments, more private sector participation, and improved transparency and efficiency in the allocation process, ultimately benefiting both state and central governments and contributing to the country’s economic growth.
- The proposed amendment also aims to exclude 6 minerals from the list of atomic minerals, including Beryl, Lithium-bearing minerals, Niobium-bearing minerals, Titanium-bearing minerals, Tantallium-bearing minerals, and Zirconium-bearing minerals. These minerals find essential applications in the space industry, electronics, communications, energy sector, and electric batteries, contributing to India’s commitment to achieving net-zero emissions. Presently, their exploration and mining are restricted to government entities due to their atomic classification. However, by removing them from this list, private sector involvement will be allowed, leading to a significant increase in exploration and mining activities for these crucial minerals in the country.
- The new amendments, deals with the grant of exploration licenses for minerals specified in the Seventh Schedule through auctions. It specifies that the provisions of this section won’t apply to certain minerals and areas where the minerals do not vest in the Government.
- The State Government can grant exploration licenses for reconnaissance or prospecting operations (means regional, aerial, geophysical or geochemical surveys and geological mapping, and include pitting, trenching, drilling and subsurface excavation) for minerals listed in the Seventh Schedule; and the Central Government can amend the Seventh Schedule if needed.
- The State Government must notify areas for exploration license grants after obtaining the Central Government’s approval. If the State Government fails to do so, the Central Government can notify the areas.
- Exploration licenses may be granted through competitive bidding, and the Central Government may conduct an auction if required. The holder of an exploration license is entitled to a share of the amount quoted in mining lease auctions.
- The exploration license’s validity is for five years, extendable up to two years under certain circumstances. After three years, the holder can retain up to 25% of the total area for continued operations.
- The holder must submit a geological report to the State Government within three months of completing operations or the exploration license’s expiry. Failure to comply may result in penalties.
- The State or Central Government will initiate the auction process for mining leases based on the geological report.
With the introduction of exploration licenses and delisting of certain minerals from the atomic minerals category, some stakeholders in the mining industry might express concerns about potential competition and the impact on their businesses. Additionally, the involvement of private companies in mining might raise questions about regulatory oversight and environmental sustainability.
- The amendment is expected to attract more investments in the mining sector, leading to improved infrastructure and technology, ultimately boosting production capacity.
- By promoting domestic exploration and mining of essential minerals, India aims to reduce dependence on imports, strengthening its position in the global market.
- The streamlined exploration and mining processes through composite exploration licenses will make it easier for companies to acquire permits and licenses, reducing bureaucratic hurdles.
- The amendment’s revenue-sharing arrangement will benefit specialized mining companies, allowing them to earn revenue from mineral discoveries.
- By categorizing certain minerals as critical and strategic, the amendment empowers the central government to grant concessions to both public and private sector mining companies, stimulating growth in these sector
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