After a week of drama and suspense, the ordinance for amending the MMDR Act, which entails auction of mining leases, has been promulgated by the President. The promulgation paves the way for issuance of mining leases through competitive bidding as well as e-auction route, a process which had been lying on the back burner since February 2012.
Also as was first reported by The Pioneer on January 6, 2015, the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 which has immediately come under operation and amends the Mines and Minerals (Development and Regulation) Act, 1957, has done away with an earlier provision which had made it compulsory for lease holders to seek forest and environment clearances afresh while applying for second renewal of mines they are holding.
On January 5, confusion prevailed whether the Union Cabinet had approved the ordinance or not, as later that evening there were reports emanating from within the Government that only certain amendments had been approved in the MMDR Act 1957.
However, the ordinance was learnt to have been approved by the Cabinet the same day, but was promulgated by the President only on January 12. The ordinance approves granting of mining leases for a period of 50 years. Those already granted leases before this period, would also be deemed to have been given the leases for a period of 50 years, it says. The step is likely to bring cheer to the miners across the country.
“On the expiry of the lease period, the lease shall be put up for auction as per the procedure in this Act,” it states. Till now (prior to the promulgation of the ordinance), as per the provisions of the Mines and Minerals (Development and Regulation) Act, 1957, whenever a mine was allotted to an entity, the lease period was for 30 years. When this was on the verge of expiry, the lease holder had to apply for what was called the first renewal, which had a 20 years tenure. Till the time the renewal application lay pending with the concerned state government, the extension was granted on a “deemed” basis.
Once the first renewal period reached its end, then the lease holders normally applied for the second renewal, which was also for 20 years. During the intervening period when the second renewal application was under verification with the concerned State Government, this too was granted on a “deemed basis”.
However, in the aftermath of the Shah Commission’s (formed to probe illegal mining) damning observations against such “deemed renewals” in the instance of various states like Odisha, the Union Mines Ministry had directed mineral rich States to ask lease holders seeking second renewal to go for fresh environmental and forest clearances, which had caused a lot of heartburn among the miners.
The ordinance though says that “mining leases would be deemed to be extended from the date of their last renewal to March 31, 2030 (in the captive miners) and till March 31, 2020 (for the merchant miners) or till the completion of the renewal already granted, if any, whichever is later. Thus, no mining lease holder is likely to be put into any disadvantaged condition. It is expected that this would immediately permit such closed mines to start their operations”.
Though the ordinance calls for auction of leases to ensure transparency in the entire process, the flip side of it is that the auction of leases is likely to prove to be a set back for South Korean steel giant POSCO’s bid to seek mining lease of Khandadhar reserve for its upcoming mega steel plant in Odisha, as once the leases are given out through bidding, then it may have to bid for the block with other competitors and this is likely to further put on the backburner the already delayed country’s first Greenfield project.
This newspaper had first reported on July 9, 2014 that Centre is mulling the auction route for mining leases. The ordinance empowers the Centre to prescribe terms and conditions and procedure for bidding which include production sharing or royalty payment or a combination of both.
“The Central Government shall prescribe the terms and conditions and procedure, subject to which the auction shall be conducted, including the bidding parameters for the selection, which may include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them,” it added.
The Ordinance also prescribes setting up of a non-profit trust, District Mineral Foundation, for the welfare of the project-affected people. “The objective of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations ...,” it said.
The holder of a mining lease or a prospecting licence-cum -mining lease would have to pay to District Mineral Foundation in addition to the royalty, but not exceeding one-third of such royalty. Also there is a provision for setting up National Mineral Exploration Trust and the holder of the lease or a prospecting licence-cum-mining lease would pay 2 per cent of the royalty. “The object of the Trust shall be to use the funds accrued to the Trust for the purposes of regional and detailed exploration ...,” it said.