prpri Analysis of Mines and Minerals (Development and Regulation) Act, 2021 Analysis of Mines and Minerals (Development and Regulation) Act, 2021

Ministry of Law and Justice has amended The Mines and Minerals (Development and Regulation) Act, 2021 on 28th March, 2021.

Objectives of MMDR Amendment bill, 2021 are: –

1. The bill passed by a voice vote (vote given on a topic by responding orally), is aimed at bringing more transparency in the auction processes of the mines.

2. The major objective of the amendment is to generate employment in the mining sector and enhance the contribution of the mining sector in the total GDP of the country. The Ministry of Mines has claimed an increment of about 55 lakh direct and indirect employment to be generated due to the reforms.

3. The government, through this amendment, is making an effort to attract domestic as well as foreign investment in the mining sector plus involvement of safe and effective technology in the sector. Also, the government has permitted 100% FDI under automatic route for sale of coal, for coal mining activities including associated processing infrastructure.

4. The objective is to enhance the contribution of the mining sector in the GDP to up to at least 2.75% which at present is around 1.75%.

Before directly going to amendments we will take general overview of MMDR Act and then its amendments.

The mines and minerals sector is governed by the Mines and Minerals Act of 1957. This act provides for:

1. The governance of mining leases within the country.

2. The purpose of why the lease is given.

3. How to ensure the well-being of the people living in the areas where mines are auctioned.

Prospecting or mining operations to be under licence or lease

1. Person shall undertake any reconnaissance, prospecting or mining operations in any area in accordance with the terms and conditions of a “mineral concession” or, as the case may be, of a mining lease, granted under this Act and the rules made thereunder.

2. No person shall transport or store or cause to be transported or stored any mineral otherwise than in accordance with the provisions of this Act and the rules made thereunder.

Termination of prospecting licences or mining leases

1. Central Government after consultation with the State Government is of opinion that it is expedient in the interest of regulation of mines and mineral development, preservation of natural environment, control of floods, prevention of pollution, or to avoid danger to public health or communications or to ensure safety of buildings, monuments or other structures or for conservation of mineral resources or for maintaining safety in the mines or for such other purposes, it may request the State Government to make a premature termination of a prospecting licence or mining lease in respect ofany mineral other than a minor mineral in any area or part thereof, and, on receipt of such request, the State Government shall make an order making a premature termination of such prospecting licence or mining lease with respect to the area or any part thereof. And in respect of minor mineral state government shall make order without approval of central government.

“Minor Minerals” means building stones, gravel, ordinary clay, ordinary sand and other sand used for prescribed purposes, and any other mineral which the Central  Government may, by notification in the Official Gazette, declare to be a minor mineral.

2. Where the holder of a mining lease fails to undertake production and dispatch (before amendment word is mining operations) for a period of 2 years after the date of execution of the lease or having commenced production and dispatch, has discontinued the same for a period of 2 years, the lease shall lapse on the expiry of the period of 2  years from the date of execution of the lease or, as the case may be, discontinuance of the production and dispatch.

Amendment- “Provided that the State Government may, on an application made by the holder of such lease before it lapses and on being satisfied that it shall not be possible for the holder of the lease to undertake production and dispatch or to continue such production and dispatch for reasons beyond his control, make an order, within a period of three months from the date of receipt of such applicationto extend the period of two years by a further period not exceeding one year and such extension shall not be granted for more than once during the entire period of lease:

Provided further that such lease shall lapse on failure to undertake production and dispatch or having commenced the production and dispatch fails to continue the same before the end of such extended period.”

Restrictions on the grant of prospecting licences or mining leases

A State Government shall not grant a mineral concession to any person unless such person-

1. is an Indian national, or company as defined in section 2(20) of the Companies Act, 2013.

2. satisfies such conditions as may be prescribed: –

(a) in respect of any mineral specified in Part A and Part B of the First Schedule, mineral concession shall be granted after approval of the Central Government.

(b) Amendment- composite licence or mining lease shall not be granted for an area to any person other than the Government, Government company or corporation, in respect of any minerals specified in Part B of the First Schedule where the grade of such mineral in such area is equal to or above such threshold value as may be notified by the Central Government.

No mining lease shall be granted by the State Government unless it is satisfied that-

1. there is evidence to show the existence of mineral contents in the area for which the application for a mining lease has been made in accordance with such parameters as may be prescribed for this purpose by the Central Government;

2. there is a mining plan duly approved by the Central Government, or by the State Government, in respect of such category of mines as may be specified by the Central Government, for the development of mineral deposits in the area concerned:

Provided that a mining lease may be granted upon the filing of a mining plan in accordance with a system established by the State Government for preparation, certification, and monitoring of such plan, with the approval of the Central Government.

Periods for which mineral concession may be granted or renewed.

1. Period should not exceed3 years.

2. If the State Government is satisfied that a longer period is required to complete prospecting operations, period of licence shall be granted upto maximum 5 years.

Period of grant of a mining lease

For minerals covered in Part A of the First Schedule

Maximum period for a mining lease may be granted for 30 years and minimum period should be 20 years. It can be renewed for a period for a maximum period of 20 years with the pervious approval of the Central Government.

For minerals other than which are covered in Part A of the First Schedule

All mining leases shall be granted for the period of 50 years.

Where mineral is used for captive purpose and lease is granted before the date of commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 shall be extended and be deemed to have been extended upto a period ending on 31st March 2030.

And where mineral is used for other than captive purpose lease shall be extended and be deemed to have been extended up to a period ending on the 31st March 2020.

Amendments: –

1. In case of Government companies or corporations the period of mining leases including the existing mining leases, shall be such as may be prescribed by the Central Government.

 The period of mining leases, other than the mining leases granted through auction, shall be extended on payment of such additional amount as specified in the Fifth Schedule.

2. Any lessee may, where minerals is used for captive purpose, sell such minerals up to 50 per cent. of the total minerals produced in a year after meeting the requirement of the end use plant linked with the mine in such manner as may be prescribed by the Central Government and on payment of such additional amount as specified in the Sixth Schedule.

The sale of coal shall not be allowed from the coal mines allotted to a company or corporation that has been awarded a power project on the basis of competitive bid for tariff (including Ultra Mega Power Projects)

3. All valid rights, approvals, clearances, licences and the like granted to a lessee in respect of a mine (other than those granted under the provisions of the Atomic Energy Act, 1962 and the rules made thereunder) shall continue to be valid even after  expiry or termination of  lease and  shall be transferred to, and vested; subject to the conditions provided under such laws; in the successful bidder of the mining lease selected through auction under this Act.

Where on the expiry of such lease period, mining lease has not been executed, or lease executed pursuant to such auction has been terminated within a 1 year from such auction, the State Government may, with the previous approval of the Central Government, grant lease to a Government company or corporation for a period not exceeding 10 years or till selection of new lessee through auction, whichever is earlier and such Government company or corporation shall be deemed to have acquired all valid rights, approvals, clearances, licences and the like vested with the previous lessee.

Royalties in respect of mining leases

1. The holder of a mining lease has to pay royalty in respect of any mineral removed or consumed by him or by his agent, manager, employee, contractor or sub-lessee rom the leased area at the rate for the time being specified in the Second Schedule in respect of that mineral.

2. The holder of a mining lease shall not be liable to pay any royalty in respect of any coal consumed by a workman engaged in a colliery provided that such consumption by the workman does not exceed 1/3rdof a tonne per month.

3. The Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of 3 years.

Dead rent to be paid by the lessee

1. The holder of a mining lease has to pay dead rent at such rate as specified in Third Schedule to State Government for all areas included in the instrument of lease.

2. Where the holder of such mining lease becomes liable to pay royalty then he should pay royalty or dead rent whichever is greater.

3. The Central Government shall not enhance the rate of royalty in respect of any mineral more than once during any period of 3 years.

District Mineral Foundation

District Mineral Foundation shall work for the interest and benefit of persons, and areas affected by mining related operations in such manner as may be prescribed by the State Government.

The holder of a mining lease or composite licence granted on or after the date of commencement of MMDR amendment act 2015, shall, in addition to the royalty, pay an amount which is equivalent to such percentage of the royalty paid as per Second Schedule to the District Mineral Foundation but not exceeding 1/3rd of royalty, as prescribed by the Central Government.

National Mineral Exploration Trust

The object of the Trust shall be to use the funds accrued for the purposes of regional and detailed exploration in such manner as may be prescribed by the Central Government.

The holder of a mining lease or composite licence shall pay to the Trust, a sum equivalent to 2% of the royalty paid in terms of the Second Schedule, in such manner as may be prescribed by the Central Government.

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