The Mines and Minerals Development and Regulation) Amendment Bill, 2021 was introduced in the Lok Sabha on 15 March 2021. The Amendment Bill seeks to bring significant reforms to the mining sector. The key amendments proposed to the Mines and Minerals (Development and Regulation) Act,1957 (the “Principal Act”) are as follows:

1. No distinction between captive and merchant mines; level playing field between auctioned mines and mines of Government Companies [Sections 8 and 8A amended]: The distinction between captive and merchant mines has been removed by providing for auction of mines without the restriction of captive use of minerals. Further, existing captive mines, including captive coal and lignite mines, are allowed to sell up to fifty per cent. of the minerals produced after meeting the requirement of the end use plant linked with the mine and on payment of an additional amount as specified in a new Sixth Schedule. The Central Government is empowered to increase the percentage of mineral that may be sold by Government companies or corporations. The sale of minerals by captive plants is expected to facilitate increase in production and supply of minerals, ensure economies of scale in mineral production, stabilize prices of ore in the market and bring additional revenue to the States.The period of mining leases, other than the mining leases granted through auction, shall be extended on payment of an additional amount as specified in a new Fifth Schedule. To level the playing field between auctioned mines and mines of Government companies, all such Government companies or corporations whose mining lease has been extended after the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, shall also pay the additional amount specified in the Fifth Schedule for the mineral produced after the commencement of the Amendment Act, 2021, once it comes into force.

2. Continuity of mining operations/ transfer of statutory clearances; short term mining lease to government companies [section 8B substituted] : All valid rights, approvals, clearances, licences and the like, granted to a lessee in respect of a mine will continue to remain valid even after expiry or termination of lease and such clearances will be transferred to and vested in the successful bidder of the mining lease. This will ensure continuity in mining operations even with change of lessee, conservation of mineral and avoid the repetitive and redundant process of obtaining clearances again for the same mine.In cases where the auction procedure to be undertaken upon expiry of a mining lease (as prescribed under the Principal Act) has failed, short term mining leases (for upto ten years or till selection of new lessee through auction) may be granted to government companies.

3. Closure of pending cases of non-auctioned concession holders [Section 10A amended] : With respect to rights of existing concession holders and applicants, in case of pending cases of non-auctioned concession holders, the right to obtain a mining lease or a prospecting license followed by a mining lease, will lapse upon the commencement of the Amendment Act. This is aimed at closing the pending cases of non-auctioned concession holders which have not resulted in grant of mining leases, despite passage of a considerable time of more than five years. This closure will facilitate the Government to put to auction a large number of mineral blocks and early operationalisation of such blocks leading to additional revenue to the State Governments.

4. Removal of restrictions on transfer of mineral concessions for non-auctioned mines [section 12A amended] : The transferee of a mining lease which has been granted otherwise than through auction and where mineral from such mining lease is being used for captive purpose, will not be required to pay the prescribed amount or transfer charges as a condition of such transfer. However, no refund shall be made of the charges already paid.

5. Fixed time frame for grant of leases for reserved areas to Government Companies : Section 17A, which provides for reservation of areas for conserving minerals not held under any mining or prospecting lease is amended to provide that such reservation will lapse in case no lease has been granted within five years from the date of reservation. Where the period of five years has expired before the date of commencement of the Amendment Act, 2021 or expires within a period of one year from the date of commencement of the Amendment Act, the reservation will lapse in case no mining lease is granted within a period of one year from the date of commencement of the said Act. The State Government is empowered to relax this period by granting a further extension of upto one year.In cases where the Government company or corporation in whose favour an area has been reserved before the commencement of the Amendment Act, 2015, has already commenced production without execution of mining lease, such Government company or corporation will be a deemed lessee of the State Government from the date of commencement of mining operations. The deemed lease will lapse upon execution of the mining lease or expiry of period of one year from the date of commencement of the Amendment Act, 2021, whichever is earlier.The termination or lapse of a mining lease will automatically result in lapse of the reservation.

6. The Central Government is empowered to give directions regarding composition and utilisation of funds received by the District Mineral Foundation [section 9B, pertaining to the District Mineral Foundation, amended].

To refer to the Mines and Minerals (Development and Regulation) Amendment Bill, 2021, click here.