The Mineral Laws (Amendment) Bill 2020

The Mineral Laws (Amendment) Bill, 2020

The Mineral Laws (Amendment) Bill, 2020 was introduced in Lok Sabha on 2ND of March, 2020. The Bill amends the Mines and Minerals Act, 1957 (MMDR Act), and therefore the Coal Mines Act, 2015 {CMSP (SP stands for SPECIAL PROVISION) }. An Ordinance with similar provisions was enforced on the 10th of January, 2020.

 The MMDR Act regulates the general mining sector in India. The Coal Mines (Special Provisions) Act, 2015 provides for the auction and allocation of mines whose allocation was canceled by the Supreme Court in 2014. Schedule I of the Act provides an inventory of all such mines; Schedule II and III are sub-classes of the mines listed within the Schedule I. Schedule II Mines are those where production had already begun then, and Schedule III Mines are ones that had been marked for a specified end-use.

The amended provisions clearly provide that companies that don’t possess any prior coal mining experience in India and/or have mining experience in other minerals or in other countries can participate in the auction of coal/lignite blocks. This will not only increase participation in coal/lignite block auctions but also facilitate the implementation of FDI policy within the coal sector.

Now, the businesses which aren’t ‘engaged in specified end-use’ also can participate in auctions of Schedule II and III coal mines. The removal of the top use restriction would allow wider participation in the auction of coal mines for a spread of purposes like own consumption, sale, or for any other purpose, as could also be specified by the Central Government.

The Bill also allows prospecting license-cum-mining lease (PL-cum-ML) for coal/lignite which increases the supply of coal & lignite blocks, and coal blocks of varying grades during a wide geographical distribution will be available for allocation.

Removal of restriction on end-use of coal: Currently, companies acquiring Schedule II and Schedule III coal mines through auctions can use the coal produced just for specified end-uses like power generation and steel production. The Bill removes this restriction on the utilization of coal mined by such companies. Companies are going to be allowed to hold on coal mining operations for their own consumption, sale, or for the other purposes, as could also be specified by the central government.

Eligibility for auction of coal and lignite blocks: The Bill clarifies that the businesses need not possess any beforehand or prior coal mining experience in India so as to participate within the auction of coal and lignite blocks. Later on, the competitive bidding process for auction of coal and lignite blocks, it won’t apply to mines considered for allotment too:

(a) a government company or its venture for own consumption, sale or the other specified purpose; and

(b) a corporation that has been awarded an influence project on the idea of a competitive bid for the tariff.

Composite license for prospecting and mining: Currently, separate licenses are provided for survey and mining of coal and lignite, called prospecting license, and mining lease, respectively. It includes exploring, locating, or finding mineral deposits. The Bill adds a replacement sort of license, called prospecting license-cum-mining lease. This will be a license providing for both prospecting (survey, excavation, etc.) and mining activities.

Non-exclusive reconnaissance permit holders to urge other licenses: Currently, the holders of non-exclusive reconnaissance permit for exploration of certain specified minerals aren’t entitled to get a prospecting license or mining lease. Reconnaissance means prospecting of a mineral through certain surveys. The Bill states that the holders of such permits may apply for a prospecting license-cum-mining lease or mining lease. This will apply to certain licensees as prescribed within the Bill.

Transfer of statutory (from Government) clearances to new bidders: Currently, soon after the expiry, mining leases for specified minerals are often transferred to new persons through auction. This new lessee (the highest bidder)is required to get statutory clearances before starting mining operations. The Bill provides that the varied approvals, licenses, and clearances given to the previous lessee are going to be extended to the successful bidder for a period of two years. During this era, the new lessee is going to be allowed to continue mining operations. However, the new owner or lessee must obtain all the specified clearances within this two-year period.

Reallocation after the termination of the allocations: The CMSP Act provides for the termination of allotment orders of coal mines in certain cases. The Bill adds that such mines may be reallocated through auction or allotment as may be determined by the central government. The central government will appoint a delegated custodian to manage these mines until they’re reallocated.

Prior approval from the central government: Under the MMDR Act, state governments require prior approval of the central government for granting reconnaissance permit, prospecting license, or mining lease for coal and lignite. The Bill provides that prior approval of the central government will not be required in granting these licenses for coal and lignite, in certain cases.

These include cases –

 a) the allocation has been done by the central government,

b) the mining block has been reserved to conserve a mineral.

Advance action for auction: Under the Mines and Mineral Act, mining leases for specified minerals are auctioned on the expiry of the lease period. The specified minerals are those minerals aside from coal, lignite, and atomic minerals. The Bill provides an injunction to the new lessee that state governments can take advance action for auction of a mining lease before its expiry.

“The views of the authors are personal

Frequently Asked Questions

If applications are not processed as per time limits, what are the remedies?

In cases of delay, either at State Government or in some instances the Central

Government level (in the case of Atomic Minerals, Beach Sand Minerals, etc.), National

Mining Tribunal can be approached for relief for major minerals [Section 85(1)(a)] and in

case of minor minerals, the State Mining Tribunals [Section 99(1)(a)].

What would be the status of existing concessions under the new Mines and Minerals (Development and Regulation) Act (New Act)?

All valid concessions under the existing regime shall continue under the New

Act [proviso to Section 4(1)] and extension shall be given irrespective of the size [Section  7(7)].

What would be the status of applications pending with state government at the time of commencement of the New Act?

Except for applications which have been made for

(i) seamless transition from RP to PL and PL to ML;

(ii) applications which have received prior approval of Central Government, and

(iii) applications, where a Letter of Intent (LOI) to grant a concession, has been issued, all other applications shall abate [Section 4(6)].

Does the Central Government has powers to issue directions to State Governments?

Yes, The Central Government can issue directions:

In cases of illegal and unscientific mining to State Governments [Section 127(2) and section 127(3)].

In cases where mining activity is related to organized crime or anti-national activities, Central Government can direct the State Government to determine the mining lease [Section 30(4)].