Mining reforms: Industry vocal against ‘premature’ repeal of existing leases

Industry body CII said all the cases saved under section 10A(2)(b) where all the conditions have been fulfilled by applicants, must be expeditiously granted by the government in a time-bound manner.

The government’s proposal to amend relevant provisions of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, to pave the way for auctioning of 500-odd non-coal, non-fuel blocks, which were allocated before the amended Act came into effect but have not started production yet, faces resistance from the industry.

Caught in legacy and/or legal issues, such blocks fall either under Section 10A (2)(b) – where reconnaissance permit (RP) or prospecting licence (PL) were issued, but mining leases (MLs) were not granted; or under 10A(2)(c) – relating to pending grant of ML, these blocks are not contributing either towards mineral production or generating employment. Both the provisions were added with the amendment of the MMDR Act in 2015.

In its latest reform proposals, the mines ministry batted for auctioning such leases as “continuing with the existing provisions of 10A (2)(b) and 10A(2)(c) will also cause huge financial loss to the state exchequer, the amendment Bill seeks to amend the existing provision of Section 10(A)(2)(b) and 10A(2)(c), and reallocation of such mineral blocks through transparent method of auction”. These amendments are likely to be approved in the ensuing session of Parliament.

Miners’ body Federation of Indian Mineral Industries (FIMI) said the proposal to amend the Act for repealing Section 10A(2)(b) was not at all desirable as it could prove to be counter-productive for the mineral development of the country.

“The existing RP/PL holders have invested huge resources and put long years to undertake risky exploration activities and have helped India to discover valuable mineral deposits,” it said, adding that rather than scrapping, section 10A(2)(c) may be amended by extending the timeline for another five years till January 2022 for grant of mining leases to such deserving concession holder.

Industry body CII said all the cases saved under section 10A(2)(b) where all the conditions have been fulfilled by applicants, must be expeditiously granted by the government in a time-bound manner.

“The transition to an auction only regime cannot be at the cost of premature termination of mineral rights given to investors by the statute itself. It is really difficult to believe that the 500-odd concessions currently locked up under Sections 10A (2b) and (2c) are the only options to kick start investment in the mining sector when we all know that only 10% of the total area having obvious geological potential (OGP) for mineral resources have been explored in detail in India,” CII said.

Indian Steel Association (ISA) supports amendments to these sections, but at the same time, it wants the government to consider protecting the right of the PL holders who have already completed prospecting and have filed application with the states for mining lease.

“Rather than repealing or modifying section 10A(2)(C), as introduced by the 2015 Amendment, to oust applicants who have not succeeded in getting mining leases executed so far, we respectfully submit that it may be more fruitful to set up an inter-ministerial task force of the central government to scrutinise all such cases,” it said.

All are, however, in agreement on the mines ministry’s proposal of doing away with the distinction between captive and non-captive mines. Though ISA agrees with the ministry’s proposal of increasing the existing limit of allowing 25% of the minerals for sale by the auctioned captive mines to the level of 50%, FIMI disagrees, CII, on the other hand, wants removal of such a cap altogether.

The proposal to develop national mineral index on the lines of national coal index is redundant, according to FIMI; but CII and ISA agree with some caveats.

ISA said that the broad objective of the reform proposals should be to ensuring increased iron ore supply to small steel producers and that the vision of national steel policy can be fructified.