Mines and Minerals Amendment Bill 2021- Explained, Pointwise

Introduction

The Lok Sabha and Rajya Sabha passed the Mines and Minerals (Development and Regulation) (MMDR) Amendment Bill,2021. The MMDR Bill 2021 seeks to amend the Mines and Minerals (Development and Regulation) Act, 1957. This bill is expected to be the watershed moment in the development of mines and minerals in India.  In this article, we will analyze the MMDR Bill 2021.

Types of Mines in India

At present, there are two types of mines in India. They are:

  1. Captive Mines: Captive industries own these mines. The coal or mineral produced from these mines is for the exclusive use of the owner company of the mines. The company cannot sell coal or mineral outside. Some electricity generation companies used to have captive mines.
    For Example, If an iron ore mine is allowed to a captive industry(iron and steel plant). Then that iron and steel plant can use the iron ore only for producing steel for their company. They cannot sell the ore to any outsider.
  2. Non- Captive Mines: In Non-captive mines, the minerals obtained by a company can be sold in the market.

Note: Specified minerals include minerals other than coal, lignite, and atomic minerals.

About the MMDR Bill 2021
  1. There are two important Acts that govern the mines and minerals in India. They are,
    1. The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act)
    2. The Coal Mines (Special Provisions) Act, 2015 (CMSP Act).
  2. The MMDR Act regulates the overall mining sector in India. Further, the MMDR Act empowers the central government to reserve any mine for the particular end-use(Captive mines).
  3. Similarly, the CMSP Act provides for the auction and allocation of mines.
  4. The Mines and Minerals (Development and Regulation) (MMDR) Amendment Bill,2021 amends both the MMDR Act and CMSP Act. Further, it aims to provide holistic development of mines and minerals in India.
  5.  An Ordinance with similar MMDR bill provisions was also promulgated in January 2020.
Salient provisions of the MMDR Bill 2021
  1. Removes distinction between captive and non-captive mines:
    • The Bill removes the distinction between captive and non-captive mines. It will not reserve any mine for a particular end-use. All mines will now be able to sell their extra minerals.
  2. Sale of minerals by captive mines: The MMDR Bill 2021 provides that captive mines (other than atomic minerals) may sell up to 50% of their annual mineral production in the open market after meeting their own needs. But they need to pay the royalty to the central government.
  3. National Mineral Exploration Trust (NMET): The Bill provides for the constitution of a Statutory body named the National Mineral Exploration Trust (NMET). It will see the overall functioning of the mining sector.
  4. National Mineral Index(NMI): The Bill proposes to introduce an index-based mechanism by developing a National Mineral Index(NMI). Various statutory payments and future auctions can use the National Mineral Index in the future.
  5. Transfer of statutory clearances:
    • Presently, an auction is conducted to determine the fresh mining leases after the expiration of a mineral lease.
    • The auctioned person(new lessee) needs to obtain statutory clearances before starting mining operations.
    • The MMDR Bill 2021 changes this provision. It makes the transferred statutory clearances valid throughout the lease period of the new lessee.
  6. Auction by the central government in certain cases: The Bill provides that if the State Government is not able to complete the auction process within a specified time, the Central Government may take over and conduct such an auction.
Concerns with the MMDR Bill 2021
  1. The bill is seen by various state governments as the restriction of their revenue generation and indulgence of the central government in the State mineral policy. The reasons are,
    • Fixing the royalty to States: The bill mentions fixing royalty payments to the states for the mining leases provided to Central PSUs. This might reduce the amount of revenue to the state government.
    • Vesting the ultimate power with the Centre: The bill provides for auction by the central government in certain casesState governments see this as the central government supremacy in the State mining lease policy.
    • Centre’s direction to District Mineral Fund(DMF): Under the MMDR Bill 2021, the centre can direct the spending of DMF. The States on the ground have to perform the actions directed by the Centre. States see this as the Centralization of DMF.
      District Mineral Fund: The District Mineral Fund is established based on the contribution of major or minor mineral exploring companies in a district. The fund is utilised in the interest of the persons and areas affected by mining-related operations.
  2. Environment concerns with the MMDR bill 2021: As the mining is liberalised under the MMDR Bill 2021, there are higher chances of degrading the environment, restricting tribal rights, threatening the biodiversity of the area etc.
Advantages of the MMDR Bill 2021
  1. Exploration of India’s mineral potential: India has the same mineral potential similar to Australia, South Africa. Further, India is producing 95 minerals. But India still imports minerals worth more than Rs. 2.5 lakh crore a year. The MMDR Bill 2021 facilitates to explore better mining of minerals. This will improve the commercial mining capability of India.
  2. Effective mining and creates huge employment benefits: More exploration of mines will lead to effective and profitable mining in India. Further, the mines and minerals located in the Indian hinterland will create local employment at an enormous level.
  3. Transparency in the mining process: The MMDR Bill 2021 aims to infuse transparency in the mining sector. Further, it will also reduce the red-tapism as the bill provides for the transfer of statutory clearances, new NMI index etc.
  4. Variety of benefits: The relaxation of mining restriction on Captive mines and the transfer of statutory clearances have few significant advantages, like,
    • More investment into the mining sector: This will facilitate more internal investments, FDI and increase Forex reserves. Apart from that, this will bring more new technology into the mining sector.
    • Since the captive mines can sell their minerals commercially to other industries, It will spur the growth of other industries. Further, this will reduce the import of raw materials. This is in line with creating Atmanirbhar Bharat.
    • Companies can create additional revenue by selling minerals to other Industries and intermediaries.
Suggestions
  1. Protect the Environment: Both the Centre and State government should ensure the protection of the environment. Further, the relaxation of mining to the companies should not violate the provisions of the environment. To ensure that, the government have to create a proper and periodic environmental auditing mechanism.
  2. Creating other safeguards in long run: The implementation of the MMDR Bill 2021 have to monitor closely for enhancing the contribution of the mining sector to 2.5% of Indian GDP(at present it is 1.75%). The implementation of the MMDR Bill 2021 depends upon various organs of the state and private sector. So, the issues in the implementation have to identify and rectified either Judicially or legislatively or administratively or in other ways.
  3. Creating adequate infrastructure in other sectors: The development of mines and minerals depend on India’s logistical capability, development of ports, railways etc. So to create an adequate export capacity of Mines and minerals, India needs to develop adequate infrastructure in other sectors.
  4. India needs to reduce the cost of the value addition of minerals: The government has to reduce the losses associated with the value addition of minerals. Or else, India can face challenges in sustaining the industry.
    For example, China imports iron ores from India. But due to efficient value addition, China produces steel at a low cost. Further, China also exports them to India and disrupt the domestic steel industry.
Conclusion

Overall the MMDR Bill 2021 might provide a strategic push in the mining sector. Over a period of time, India can fulfil its mineral needs, create employment, ensure the growth of industries, etc. Thus, the proper implementation MMDR Bill will make India a global supplier of minerals to the whole world.

 

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