Parliament passes Mines and Minerals (Development and Regulation) Amendment Bill, 2021

Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill after the Rajya Sabha passed it on March 22, 2021 through voice amid opposition's demand to send it to a select committee for scrutiny. The Lok Sabha had passed the bill earlier on March 19th.

The Bill seeks to amend the Minerals (Development and Regulation) Act 1957 and provide for the removal of the distinction between captive and merchant mines. It will help create employment opportunities and allow participation of private sector with enhanced technology in mining activities.

The bill will also empower the central government to issue directions regarding the composition and utilization of funds maintained by the District Mineral Foundation. It also states that captive mines other than atomic minerals may sell up to 50 percent of their annual mineral production in the open market after meeting their own needs.

According to Coal and Mines Minister Pralhad Joshi, the bill has been brought to reform the mining sector in the country. He pointed out that the country has large reserves of several minerals but only 45 percent has been tapped so far, which results in more dependence on imports. He assured that the bill will not curb the powers of states, as claimed by few opposition parties.

Further, terming the bill as historic, the Minister said that it will lead to an increase in the production level of minerals and generate employment, increase revenues and ensure private participation in the exploration and mining activities. 

Mines and Minerals (Development and Regulation) Amendment Bill, 2021: Key Features

1. Removal of restriction on end-use of minerals

The bill allows the centre to reserve any mine (other than coal, lignite, and atomic minerals) to be leased through an auction for a particular end-use (such as iron ore mine for a steel plant). Such mines are known as captive mines.

2. Sale of minerals by captive mines

As per the bill's provisions, the captive mines can sell up to 50 percent of their annual mineral production in the open market after meeting their own requirements.  

3. Auction by central government in certain cases

i) The Minerals (Development and Regulation) Act 1957 provides that the states will conduct the auction of mineral concessions (other than coal, lignite, and atomic minerals). 

ii)The amendment bill will empower the centre to specify the time period for completion of the auction process in consultation with the state government.

iii)In case the state government fails to complete the auction process within the stipulated time period, the auctions will be conducted by the centre. 

4. Mining Leases

i) When a mining lease expires generally, the mines (other than coal, lignite, and atomic minerals) are leased to new persons through auction.

ii)In such cases, the statutory clearances issued to the previous lessee are transferred to the new lessee for a period of two years. The new lessee is required to obtain fresh clearances within these two years. 

iii)The amendment bill, however, replaces this provision and provides that transferred statutory clearances will be valid throughout the lease period of the new lessee.

iv)The bill also adds that mines (other than coal, lignite, and atomic minerals), whose lease has expired, may be allocated to a government company in certain cases.  This will be applicable if the auction process for granting the new lease was not completed, or the new lease has been terminated within a year of the auction. 

v)In such a case, the state government may grant a lease for such a mine to a government company for a period of up to 10 years or until the selection of a new lessee, whichever is earlier.

vi)Further, the act provides that the period of mining leases granted to government companies will be prescribed by the central government. The amendment Bill provides that the period of mining leases of government companies (other than leases granted through auction) may be extended on payment of additional amount prescribed in the Bill.

5. Conditions for lapse of mining lease

Under the Minerals (Development and Regulation) Act 1957, a mining lease will lapse if the: 

(i) Lessee is unable to begin mining operations within two years of the grant of a lease
(ii) Lessee has discontinued mining operations for two years.  

However, the lease will not lapse at the end of the period if the state government provides a concession upon an application by the lessee. The amendment adds that the total period for lapse of the lease may be extended by the state government only once and up to one year.

Background 

The Mines & Minerals (Development and Regulation) Amendment Bill 2021 was introduced in the Lok Sabha on March 15, 2021. It was introduced by Coal Minister Pralhad Joshi. 

The legislation seeks to fully harness the potential of the mineral sector, increase employment and investment in the mining sector and help increase the revenue of the States. The bill will also help in increasing the production and time-bound operationalisation of mines in the country.