The Cabinet today approved an ordinance for auction of iron ore and other minerals, yet again opting the emergency route that was adopted for coal, insurance and land acquisition reforms.
“The cabinet has approved promulgating an ordinance to auction iron ore and other minerals,” a government source said after the meeting of the Union Cabinet chaired by the Prime Minister Narendra Modi here.
The ordinance would pave the way for introduction of competitive bidding for allocation of iron ore and other non-coal mines. It will also enable creating District Mineral Funds for the welfare of the project-affected people.
The need for taking the ordinance route was felt as the government was finding it difficult to allocate mines, because the Mines Ministry could not table a Bill in the Winter session of Parliament to amend the Mines and Minerals (Development and Regulation) Act, 1957.
Industry body Federation of Indian Mineral Industries, however, has been opposing the auction route, saying it would sound the ‘death knell’ for the industry and may lead to cartelisation and waste.
While a a draft Bill was put up on the Ministry’s website for public comments, the Mines and Minerals (Development and Regulation) (Amendment) Bill, 2014, could not be tabled during the session that ended last month.
The ordinance would also enable greater decentralisation of power to states for allocation of resources.
The mining sector has been reeling under several issues like ban for the past few years. The previous UPA government had also brought in a Bill in 2011 to amend the Act. But the Bill got lapsed with dissolution of the previous Lok Sabha.
Mines Minister Narendra Singh Tomar had earlier said the amendments were required to kickstart the sector by removing bottlenecks that are preventing the industry from becoming a growth-multiplier in the country.
However, FIMI contended that the auction route was not pursued in any resource-rich country as it may result in cartelisation and monopolistic practices.
The auction route may also lead to selective mining while leaving low grade minerals in the ground, wastage of resources and inflate the cost of final product making it uncompetitive vis-a-vis imports, it had said.
After the Cabinet’s nod, the ordinance will now go to the President for approval to become law.
The draft MMDR Bill had proposed higher prison term and hefty penalty of Rs 5 lakh, 20 times higher than the fine prescribed in the existing ACT for violating terms of mineral excavations.
Though mining is a state subject, the Bill sought to empower the Centre to prescribe different terms and conditions for auctions for different types of minerals and their application to different states.
It aimed at attracting private investment and latest technology as well as eliminating administrative delays to enable expeditious and optimum development of mineral resources of the country.
It also looks at paving the way for leases to be easily transferable.