The Mines and Minerals (Development and Regulation) Amendment Bill, 2023

Current News:-

The Rajya Sabha has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 for making amendments to the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957.

Background

The MMDR Act, 1957 was amended in 2015 to introduce auction-based mineral concession allocation for transparency, create District Mineral Foundation (DMF) for the welfare of affected communities, establish National Mineral Exploration Trust (NMET) to promote exploration, and impose stricter penalties for illegal mining.

The Act was further amended in 2016 and 2020 to address specific emergent issues and was last amended in 2021 to bring further reforms in the sector, such as, removing the distinction between captive and merchant mines, etc.

However, the mineral sector required more reforms particularly for increasing exploration and mining of Critical Minerals that are essential for economic development and national security in the country.

The lack of availability of the critical minerals or concentration of their extraction or processing in a few geographical locations may lead to supply chain vulnerabilities and even disruption of supplies.

Critical minerals have gained significance in view of India's commitment towards energy transition and achieving Net-Zero emission by 2070

Key Provisions under the Bill

Private Sector to Mine Atomic Minerals

The Bill allows the private sector to mine six out of 12 atomic minerals such as lithium, beryllium, niobium, titanium, tantalum and zirconium.

When it becomes an Act, Centre will have powers to auction mining lease and composite licence for critical minerals such as gold, silver, copper, zinc, lead, nickel etc.

Auction for Exploration License

The exploration license will be granted by the state government through competitive bidding.

The central government will prescribe details such as manner of auction, terms and conditions, and bidding parameters for exploration license through rules.

Maximum Area in which Activities are Permitted

The Bill allows activities under a single exploration licence in an area up to 1,000 square kilometres.

After the first three years, the license will be allowed to retain up to 25% of the originally authorised area.

Incentive For Exploration Licence

If the resources are proven after exploration, the state government must conduct an auction for mining lease within six months of the submission of the report by the exploration licencee. The licencee will receive a share in the auction value of the mining lease for the mineral prospected by them.

Status of Mining Sector In India

Backbone of Manufacturing

Mining industry plays a crucial role in the country's economy, serving as the backbone for manufacturing and infrastructure sectors.

According to the Ministry of Mines, the total value of mineral production (excluding atomic and fuel minerals) during 2021-22 amounted to Rs 2,11,857 crore.

Scope

India ranks 4th globally in terms of iron ore production and is the world's 2nd largest coal producer as of 2021.

Combined Aluminum production (primary and secondary) in India stood at 4.1 MT per annum in FY21 becoming the 2nd largest in the world.

In 2023, the mineral’s demand is likely to increase by 3%, driven by expanded electrification and overall economic growth in India.

India holds a fair advantage in production and conversion costs in steel and alumina. Its strategic location enables export opportunities to develop as well as fast-developing Asian markets.

Issues In This Sector

Contribution of the mining sector in India’s GDP (Gross Domestic Product).

Contribution by the mining sector to the GDP is only 1.75%.

Whereas other countries like South Africa and Australia contribute 7.5% and 6.99%.

Tribal Communities

Several tribal communities and Particularly Vulnerable Tribal Groups (PVTGs) fall into the mining zones. Their residence is also threatened by an increase in mining. Their rehabilitation & compensation is another major issue.

Lack of investment in exploration and the upgradation of technology. Still obsolete and low efficient technology is used.

Environmental Concern

The reforms in the act unshackle the mining sector of India, as much it is beneficial for the development of the country. Mining is harmful from an environmental point of view.

Government policy efforts are not yet successful and faced several challenges.

Multiple Clearances And Legal hurdles

The mining sector ails from the requirement of multiple clearances, which makes the sector unviable/unprofitable. For example, Environmental/forest clearances. 

The mining sector is also susceptible to various legal pronouncements. For example, SC judgement on coal block allocation affected coal mining output.

Monopoly of PSUs

Mining sector suffers from problem of unproductive usage of assets, due to monopoly of PSUs. For example, coal India’s monopoly in coal sector

Way Forward 

The mining sector of India, hold immense potential to reduce import dependence and hurl industrial development. In this light faster administrative clearances need to be ensured and security challenges like Naxalism etc., in the mining belt need to be checked.