Government should make suitable amendments in MMDR Act

The Hitvada | B K Shukla | 28-04-2021

Recently the Central Government amended The Mines and Minerals (Development & Regulation) Act-1957, a parent statute, which contain regulations for grant of mining leases in India. Reasons cited for amendments in the Act is to boost domestic production and to reduce import of minerals but it does not seems to achieve the object. 1. “Mining operation” occurring in Section 4A of MMDR Act-2015 is now replaced by “production and dispatch”, as result Lessee has to start production and dispatch of mineral from lease area within two years from date of executing mining lease agreement. This period of two years could be extended by maximum period of 1 year, if lessee satisfied the Government that reasons for not producing and dispatching the mineral from his mine were beyond his control. Thus after period of three years, mining lease will be lapsed.

Lapsed lease could be revived, only once during entire period of lease, if lessee satisfies the Government that reasons for not producing and dispatching the mineral from his mine were beyond his control. It is pertain to note, within above period of time, lessee has to procure all “Statuary Clearance” like environment clearance, consent to operate the mine, consent of occupier of land, Forest clearance etc. and thereafter lessee have to install plant and machinery, construct road within mine and remove over burden of mine and to continue such extraction and dispatch the mineral from the mining lease without interruption during entire period of mining lease, irrespective of market conditions, lock-down, strike, labour problems or directives of authorities not to undertake mining operation. Government should examine and consider the reasons for which the lessee could not start or continue mineral production in the mine. Shortage of minerals in the domestic market cannot be overcome by lapsing existing mining leases and allotting same, through auction, to others.

  1. Tenders for allotment of minerals blocks, through auction, were invited by the State Government from “specified category of bidders” who undertakes to consume 100% of minerals in their own industry (Captive use). Such successful bidders were not allowed to sale minerals in open market. Through amendment in Section 8 and 8A of Act, the Central Government now permit such lessees to sale up to 50% minerals so produced from auctioned mine in open market, on payment of additional amount to the State Government. Had there been this condition in the tender document to sell 50% of annual production in the open market, a number of otherwise eligible applicants would have participated in the auction process and the State Government would have fetched a better premium on allotment of such mineral blocks. Subsequent relaxation to sell mineral being contrary to terms of tender documents is therefore bad in law. According to the Ministry of Mines, one of the reasons for this amendment is to make available in open market huge quantity of mineral, extracted during the last 50 years, stocked unutilised at mine head of PSU. It is matter of record that this unutilised stock of mineral is of low grade (mineral reject) therefore same could not be utilized in mineral industries. Amendments in these provisions of law will help lessees (who before amendment were not allowed to sale their mineral in open market) to sale their high grade mineral in open market. Moreover such lessees are required to pay lesser additional amount to the State Government (at the rate zero to 50% of royalty payment) in compare to lessees, who were allowed to sale the mineral in open market, (at rate of 100 to 200% of royalty payment).
  2. The Government acknowledges, it requires longer period of time for procuring environment clearances, consent to operate the mine from PCB, Forest clearances, consent of occupier of land to enter piece of land for undertaking mining operation (in some cases, such clearances are not granted even after 10 years) and therefore by amending Section 8B of the Act, validity of such statuary clearances, if already procured by previous lessees, will be extended to new lessees. Since provisions of MMDR Act and provisions for grant of above statuary clearances are govern by different statutes and separate ministries / departments, enforcement of this amendment may not help new lessees in undertaking mining operation without acquiring such clearances individually. If the Government acknowledges it is beyond control of applicant / lessees to acquire above statuary clearance in short period of time it is unfair on part of the Government, to declare the entire bunch of pending applications as lapsed (for not procuring said clearances by applicants in time), by amendment in section 10A of Act.
  3. By deleting Sub-Section (6) of Section 12A, the Government has now allowed to transfer mining leases, acquired otherwise through auction, by lessees, in favour of third parties (subject to additional payment to the State Government, mentioned in the “Sixth Schedule” of Act). Such lessees are at liberty to charge premium, from prospective transferee, for transfer of mining leases. This amendment will boost trading of mineral concessions 5. Long pending suggestion of mining industry for appropriate amendment in MMDR Act: Since the Central Government is authorised, under provisions of the Constitution, to take control of regulation and development of mines and minerals in India, suitable amendments should be made in MMDR Act authorising the Central Government to obtain all clearances required for undertaking mining operation, before any mineral block is made available for auction. The author is Mining Law Consultant and can be contacted at bhupesh.shukla@yahoo.com