The country’s legendary red tape is something all businesses dread, particularly when it can severely dent bottom lines. In most cases, loss of revenues could have short-term consequences. But in some instances, bureaucratic hurdles can have long-term impacts such as loss of market share. While loss in revenues could be recouped in due course, a loss in market share may not be easy to recover. In some cases, such losses may be irretrievable.
The mining business is one such sector where delayed sanctions can mean a profitable entity soon ending up with red ink on its balance-sheet. Problems could arise when a mining lease expires after its typical period of 20 years. Although mining companies may apply well in time for an extension of the lease, as happens typically, the renewal may not be forthcoming for months or years. Devastating Disruptions:
Where iron ore mines are concerned, any closure of operations caused by non-renewal would have severe implications, especially if the ore is meant for exports. Non-delivery of ore or disruption in supplies could result in overseas buyers simply switching over to other vendors in order to avoid cascading problems associated with a break in raw material procurement. Thereafter, the longer the wait for ore supplies to resume, the more unlikely the possibility of ever regaining those markets.
The above background helps understand the present mining imbroglio, wherein the licences of many mines stand suspended and questions raised about why mining companies have been allowed to operate on the basis of “deemed extension”.
In the case of Odisha, there were 104 mines operating at the end of 2012, with 54 doing so under “deemed extension”. Based upon the Mineral Concession Rules, 1960, in September 1994, Rule 24A(6) was inserted, amending the section and permitting deemed extension of mines after the lease period expired.
This was permitted when an application for renewal of a mining lease was submitted before its expiry and the same was not acted upon by the State Government before the lease expired, due to which the lease was deemed to have been extended by a further period till the State Government passed an order.
After allegations of illegal mining arose in the past few years, there have been suggestions that the duration of deemed extension should only be for a period of one year. Proponents of this suggestion overlook the fact that a limited extension would not solve the original problem but only create an opportunity for bureaucratic harassment. Capitalising on the fact that temporarily shutting a mine and then restarting it later could be a laborious process for miners, the permission for renewal could be deliberately stalled to pressurise miners into greasing palms. Non-payment of speed money would mean the renewal is withheld, disrupting supplies and hurting the interests of stakeholders.
To prevent precisely such a scenario, the provision of deemed extension was introduced for the benefit of miners. Moreover, such a provision presents the State Government extra time to decide on renewing the lease or not, instead of penalising miners, who have applied on time, for the State not being able to take a decision in time.
Streamline
to Sustain:
Besides these issues, it should be noted that unwanted disruptions in mining operations would badly hurt the people in terms of loss of jobs and livelihood opportunities as well as the State and the Centre in terms of loss of royalties, taxes and other revenues.
Issues relating to illegal mining and environmental concerns can be addressed through proactive processes and transparent laws. To ensure that certain mining laws are adhered to, technological aids such as RFID (radio frequency identification) and 3D laser scanners could be deployed. Regular onsite inspections by the IBM (Indian Bureau of Mines) officials and periodic audits could ensure that malpractices are curbed. Under such conditions, any violations could be quickly detected, inviting speedy penal action.
Finally, all ambiguous laws and procedures should be streamlined and simplified so that there is no scope for complexity and confusion. Such a streamlined system would facilitate faster renewals or rejections within specific timeframes and be extremely conducive for a sustained development of the country’s mineral wealth.
(The writer is a senior freelance economic journalist)