In a move that could significantly reduce hassles for investors, most mining-related approvals ? including environmental and scientific ? will be combined in a single licence, a source close to discussions in the group of ministers (GoM) on the relevant Bill told FE. An incentive structure to promote risk-taking by investors would also be one of the salient features of the revamped mineral policy on the cards, apart from a new formula for power sharing between the Centre and states.
The source added that the GoM headed by finance minister Pranab Mukherjee also felt the need for an empowered coordination committee at the Centre to reconcile the policies of different ministries at an operational level. The committee will streamline the implementation of laws pertinent to the mining industry such as the Environment Protection Act, Forest Conservation Act and the Mines Act.
The policy being mulled by the GoM would also provide for independent national- and state-level regulators for mining.
While the Centre would use legislative powers to keep control over strategic/scarce minerals ? atomic minerals like thorium and some rare earths ? licensing powers for all non-scarce minerals such as iron ore, bauxite, limestone etc would be fully devolved to states. Therefore, unlike now, states will not require the Centre?s concurrence to allow mining in case of non-scarce minerals if the new policy is implemented. Coal mining would be an exception as it is nationalised under a separate Act, and any policy change would have to be independent of the MMDR Bill (Mines and Minerals Development and Regulation (Amendment) Bill) which the GoM is looking at.
However, states would continue to need the Centre?s nod to allow mining of scarce minerals such copper, lead, zinc, gold and diamond. Also, the resources would continue to be assessed at the federal level and regulatory capacities of state mining directorates would be enhanced.
The MMDR Bill would be taken to Cabinet shortly for its clearance, a must before its introduction in Parliament.
At present, multiple approvals required from assorted government agencies has been a turn-off for investors. The problem is often compounded by inter-ministerial tussles. The government departments don?t always coordinate well among themselves and even work at cross purposes.
The latest instance where the environment ministry?s forest advisory committee withdrew the clearance given earlier to South Korea?s Posco for its steel project in Orissa is a case in point.
Regulatory ambiguity and undue delays in approvals discomfit the investor to such an extent that they even abandon committed projects or cut back the sizes of their ventures. Given this situation, the GoM reckons that policy must be changed to address the concerns of all sections with greater efficiency. The idea behind the proposed empowered panel at the Centre is also to provide for continuous review of the concession grant procedures to make them increasingly transparent and efficient, the source said.
A key element of the policy on the cards would be promotion of risk-taking by investors. This would be done by way of grant of ?absolute right? to firms willing to explore areas that are not known to bear rich mineral deposits, the source added. Apart from rights covering the full gamut of activity that precedes mineral production like prospecting, reconnaissance and exploration, the risk-takers would be encouraged with other incentives like certainty of tenure as well as transferability of rights. The idea is to reward risk-taking and promote competition ? both key to finding new deposits of important minerals that are sources of energy and/or raw materials to large industries. By providing certainty of tenure and rights, investor confidence would be boosted and they would be induced to use latest technologies, the source said.
The proposed policy, besides acknowledging the need to acquire assets abroad for enriching the availability of mineral resources in line with the surging demand of the fast-growing economy (?resources are global?), would also assert that daring firms could more aggressively look at virgin fields in India. While most of the existent mining activity in the country is confined to the 50-meter layer on the earth?s surface, going deeper could help find richer deposits of valuable minerals like copper, lead, zinc, gold and diamond, which are mostly found between 50 and 300 meters, the source said. ?Just 20 years ago, Australia assessed its iron ore reserves at 400 million tonnes. The country has exported ten times the quantity since then, and has re-assessed the reserves at 40 billion tonnes,? the source said, to drive home the point that reserve estimates could change dramatically if investors are exploratory enough. As far as scarce minerals are concerned, the Centre would have a multi-pronged approach. What is being mulled is sustained action on three fronts: R&D on alternatives, locate mineral resources abroad and invest in them, and promote recycling. In future, the government could also look at legislating for funds in basic research and application research by private companies. When it comes to recycling, scarcity of the mineral is not the only criterion; the nature of the mineral would also matter, the source said.