Amid high drama, the Union Cabinet approved significant amendments in the Mining Bill or the Mines and Minerals (Development and Regulation) Amendment Bill 2014, which carries the provision of auction of mining leases. According to highly placed sources, Government-owned mining companies are likely to be given first preference, in other words, a certain set of mines may be kept reserved for PSU companies during the auction process. The Centre will explore the mines to be put on offer, though highly placed sources said that this process is likely to take two to three years before the actual bidding will begin.
Confusion prevailed late Monday evening as after the Cabinet meeting, word went out that the Government has given the go ahead for promulgating the ordinance to implement the Mining Bill. However later it was clarified by official sources that the Cabinet had only cleared important amendments in the proposed legislation, and whether it will be initiated through the ordinance route or will be introduced in Parliament, is to be decided later.
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. The Pioneer had first reported on July 9, 2014 that Centre is mulling the auction route for mining leases.
Another amendment in the bill is set to bring good news for all the miners whose applications seeking second renewal of leases were stuck since quite some time.
According to sources privy to the development, the bill is said to have 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.
When a mine is allotted to an entity, the lease period is for 30 years. When this is on the verge of expiry, then the lease holder has to apply for what is called the first renewal, which is for 20 years. Till the time the renewal application is pending with the concerned state government, the extension is granted on a "deemed" basis.
Once the first renewal period is about to end, then the lease holders normally apply for the second renewal, which is also for 20 years. During the intervening period when the second renewal application is being studied by a state government, this too is 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.
With the amended bill apparently now silent on this clause, it could be easy for lease holders to seek the second renewal without applying for fresh green clearances.
Regarding the overall auction process, sources in the know pointed out that PSU mining companies will be given first preference for allotment of mines, as in, a set of mines are likely to be kept reserved for them even though at the same time, these entities may also get a chance to participate in the bidding process.
Also while the Union Mines Ministry is going to conduct the exploration of all the mines which will be put up for auction, through Geological Survey of India (GSI), the leases will be given away by State Governments. The necessary environmental clearances will be granted by the Environment Ministry.
Sources however pointed out that with thousands of leases pending with the Centre, the entire process of exploring the mines which are to be auctioned, is likely to take at least two to three years, before the actual bidding will begin.
Regarding the Khandadhar iron ore reserve, POSCO has for long been seeking permission from both Odisha Government as well as the Union Mines Ministry to mine the reserve which are located in the same Jagatsinghpur district of the state where its proposed 8 million tonnes per annum capacity steel plant has to come up.
In November 2014, the Odisha Government had sent the file related to POSCO's permission to mine Khandadhar reserves to the Centre, however till date no decision had been taken on it. Now with the ordinance having been promulgated, the lease for this reserve too would be put up for auction along with other mines and the South Korean major will have to bid for it.