The amended Mines and Minerals (Development & Regulation) Act (MMDRA), 2015, was meant to ensure a transparent allocation of mineral resources through auctions. But it seems to have failed to increase the pace of production from virgin blocks. Only 54 of the 106 blocks for which mining licences (ML) and composite licences (CL) were offered have been auctioned, data from the mines ministry showed. These include six CLs and 48 MLs.
A breakdown of MLs reveals that 34 greenfield resources and 14 Category-C iron ore mines were in Karnataka. None of the greenfield blocks auctioned were hitherto awarded an ML, implying a sluggish pace of production from new deposits. The three MLs executed are Category-C iron ore mines in Karnataka that had already been operative before the MMDR Act was amended. With respect to the Karnataka mines, the Supreme Court had previously ruled that environment clearances (EC) and forestry clearances (FC) granted earlier would be seamlessly transferred to successful bidders to ensure continuity of operations.
As for new mines won through intensely fought bids, the transition has not been as seamless. Historical delays in obtaining statutory clearances have strained production timelines.
“The record of converting successful auction to production is poor and very few blocks have reached the production stage. While the MMDR Act of 2015 bestows the winner of the mineral block with sub-surface mineral rights, the successful bidder has to scramble to obtain surface rights and necessary clearances. Auctions should enable the bidder to commence operations right away,” said an industry source who did not wish to be named.
Before the auctions kicked in, the country saw 300-400 concessions each year. That number has dwindled to an average of 15 per year after the MMDR Act 2015. The key impediment in accelerating production from the auctioned blocks is land acquisition and mounting delays in getting ECs and FCs. A steep tax burden on the mining sector is also slowing down the pace of production. The Effective Taxation Rate (ETR) on mining in India is in the range of 60-64 per cent, topping all other mining nations.
“States should be endowed with all regulatory clearances- EC, FC and surface rights before initiating a mineral block for online auctions. This will substantially cut the time between auction and actual production and lead to a thrust on mineral exploration”, said an official with a standalone miner.
India’s expenditure on mineral exploration is only $17 per square km and the figure pales in comparision with Australia’s $124 and Canada’s $118. The country's exploration expenditure is almost insignificant compared to other nations, even though India stands among the leaders in being a repository of minerals.