Understanding the Mines and Minerals (Development and Regulation) Amendment Act, 2021

April 9, 2021 3:27 PM

The Mines and Minerals (Development and Regulation) Amendment Act, 2021 (the Amendment Act, 2021), became a reality in less than 15 days of its first introduction as a Bill in the Lok Sabha

Mines and MineralsAs claimed by the concerned coal and mines minister, this new law is a step towards attaining mineral security of the nation

By Hemant K. Batra

The Mines and Minerals (Development and Regulation) Amendment Act, 2021 (the Amendment Act, 2021), an Act further to amend the Mines and Minerals (Development and Regulation) Act, 1957 (the Act 1957) became a reality in less than 15 days of its first introduction as a Bill in the Lok Sabha. Both the Lok Sabha and the Rajya Sabha passed the said Bill on 19th March and 22nd March, 2021, respectively. The Amendment Act, 2021 received the assent of the President on the 28th March, 2021 and was published in the Gazette of India on the same day. As claimed by the concerned coal and mines minister, this new law is a step towards attaining mineral security of the nation.

Undoubtedly, the Amendment Act, 2021 appears to be an earnest attempt by the Government in the right direction to facilitate the existing shackled and underexploited mining scenario. Moreso when the mineral sector contributes less than 2% of the India’s gross domestic product, leaving it to import minerals whoppingly worth INR 2.5 trillion per annum. As per available statistics, barely 10% of obvious geological potential stands explored by India of which merely 5% has been for mining purposes.

The Act, 1957 was broadly amended earlier in 2015 to bring about several reforms in the mineral sector, particularly requiring auction of mineral concessions to recuperate transparency and introducing stringent penalty for illegal mining. Subsequently, the Act, 1957 was further amended in 2016 and 2020 to permit transfer of leases for non-auctioned captive mines and to deal with the emergent issue of expiry of leases on 31st March 2020.

Also read: MMDR reforms to give new LIFE to the mining sector

The recent Amendment Act, 2021 amplifies an objective to abundantly utilise the potential and capacity of the mineral sector so as to intensify employment opportunities and investment in the mining sector including coal. The consequential intention also includes increasing the revenue to the States along with the flow in production as well as time bound operationalisation of mines including sustaining endurance in mining operations after change of lessee, increasing the pace of exploration and auction of mineral resources.

The most significant amendment under the new legal regime of the Act, 1957 being the elimination of differential treatment between the captive and merchant mines, as the amendment now enables – auction of mines in future without restriction of captive use of minerals as well as sale by the existing captive mines including captive coal mines of up to fifty per cent of the minerals produced after meeting the requirement of the linked end use plants. In other words, no mine will be reserved for particular end-use. This yielding concession will ensure optimal mining of mineral resources. Although, the lessee will have to pay additional charges for the minerals sold in the open market. This noteworthy amendment has been carried out on the premise that the sale of minerals by captive plants shall aid and expedite growth in production and supply of minerals leading to commercial viabilities in mineral production and consequently generating added revenue to the States. In fact, the recent amendment introduces payment of additional amount to the State Government on extension and grant of mining lease of Government companies so as to conceive a level playing field between the auctioned mines and the mines of Government companies.

Further, the new Amendment Act, 2021 quite valiantly provides that all the valid rights, approvals, clearances, licences, and the like granted to a lessee regarding a mine shall remain valid even post expiry or termination of lease and that such authorisations shall be transferred and conferred to the successful bidder of the mining lease. Undeniably, despite change of lessee, this particular amendment will guarantee uninterrupted mining operations, preservation of mineral and avoidance of repetitive, overlapping, and superfluous process of obtaining clearances yet again for the same mine. The amendment also addresses the bane of pointless pending cases of non-auctioned concession holders which have been termed by the framers of law as “anachronistic and antagonistic to the auction regime.” Rightly so, the amendment ends the pending cases of non-auctioned concession holders which did not lead to grant of mining leases. It is expected that the conclusion of the pending cases would ease and enable the

Government to put to auction a large number of mineral blocks in the best interest of nation leading to a timely and prompt operationalisation of such blocks and unquestionably additional revenue to the State Governments.
To draw fresh investment and new technology in the mining sector, the new Amendment Act, 2021 eliminates the restrictions on transfer of mineral concessions for the non-auctioned mines. A new disciplinarian system has also been inserted in the Act, 1957, which though has an efficacious agenda, could still be branded by some as meddling with State affairs. The Act, 1957 empowers the States to manage and oversee the auction of mineral concessions except the coal, lignite, and atomic minerals. The new amendment now empowers the Central Government to notify the area and conduct auction in cases where the State Governments face difficulty or fail in notifying the areas and conducting auction. This measure is to ensure auction of as many mineral blocks on regular basis for continuous supply of minerals in the country. Under the newly amended regime, the Central Government shall stipulate a timeline for completion of the auction process

The new legal regime in the mining and mineral sectors does nullify several restrictive and covert provisions as they existed in the erstwhile Act, 1957. However, any public policy and legislation, no matter how worthwhile and timely they are projected to be, have to stand the test of time and judicial review.

(The author is a Delhi-based commercial and corporate lawyer. The views expressed are his own and do not reflect the official position or policy of Financial Express Online)

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