Overcoming clearance delays: Embedded approvals for mineral blocks

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Published: June 6, 2020 1:30 AM

According to an order issued by the mines ministry on June 3, the system of embedded clearances will be tried in at five green-field blocks in each mineral-rich state on a pilot basis, with the intent to scale it up over time.

The PMU will also complete the environmental clearance process.The PMU will also complete the environmental clearance process.

Having shown a steely resolve to promote investments in the mining sector through several steps taken recently including the system of single-licence with certainty of tenure across the mining value chain, the government has now come out with a scheme under which non-coal, non-fuel mining blocks will have most clearances ready before these are put up for auction. According to an order issued by the mines ministry on June 3, the system of embedded clearances will be tried in at five green-field blocks in each mineral-rich state on a pilot basis, with the intent to scale it up over time.

A government-level project monitoring unit (PMU) will be tasked with the mandate to obtain the clearances – in fact, the PMU will be the applicant for the assorted clearances required for a mining project. All expenses related to the approvals will be recouped from the successful bidders later. As many as 20 clearances are required before the mining can start, including the environmental and forest clearances, and the approval process is tedious. On an average, environmental and forest clearances take 270 and 530 days respectively, at present.

Under the proposed pilot scheme, the two-stage forest clearance process has been eased with the first phase to be obtained by the PMU, while the successful bidder will obtain the final clearance. The PMU will also complete the environmental clearance process.

Since obtaining land rights for mining is another time consuming process, the PMU would get the land rights for mining in case of both government as well as privately-owned land. The state government should also apply and obtain all other clearances which are required for the lessee to start the mining operations. The fees for obtaining these clearances shall also be initially borne by the state government and subsequently recouped from the successful bidder.

“Since the mining plan is the basic document to start mining operation on which hinges the environment and forest clearances, the PMU should get the mining plan prepared by engaging a qualified person and then approach Indian Bureau of Mines with the mining plan which would approve the mining plan with a period of 15 days, allowing a successful bidder the flexibility to either enhance or reduce the production limit by 25%,” the mines ministry said.

In order to make it easier for the new owners of the merchant mines where lease period expired in March 2020 (auctioning was allowed even before the expiry of the lease period), the Centre had passed the Mineral Laws (Amendment) Act, 2020, passed on March 12, under which new owners can carry on with mining activity for a period of two years from the date of grant of new lease, without acquiring fresh environment and forest clearances. The lease holders could also apply for fresh licence beyond the period of two years.

“Now, the ministry wants to extend this facility also to green-field projects with a wider scope, this ministry seeks to make provision for auction of mineral blocks with pre-embedded clearances. This will help to overcome the delays in operationalisation of mines into production after the auction. This will improve the business environment and improve mining sector’s contribution to the country’s GDP and will bring greater participation of companies, ensuring better rates of auction. This will also ensure higher revenues for the state governments in auction as the minerals blocks can start production immediately after allocation. Auction of blocks with pre-embedded clearance will also be a positive step towards achieving the objectives included in ease of doing business,” the mines ministry said.

The ministry said the need to have the window of pre-embedded clearances stems from the fact that so far 95 mining leases have been allocated through the auction since 2015. However, it has been observed that due to various processes involved, start of production gets inordinately delayed. The major challenge in this regard is to speed up the present procedural processes involved in obtaining statutory clearances from various authorities of the central and state governments by the successful bidder.

The Federation of Indian Mineral Industries (FIMI) hailed the move and said this would spur investments. H. Noor Ahmed, former FIMI president, said that the government should also allow the mines already allocated through the auction route to start production immediately.

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