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Cabinet likely to take up mines ordinance today

The proposal provides for issuing new mining lease for 50 years with a re-auction after 50 years.

Written by Amitav Ranjan | New Delhi |
December 29, 2014 3:39:12 am
Mining is one of the chosen segments for the ambitious ‘Make in India’ programme of Prime Minister Narendra Modi. Mining is one of the chosen segments for the ambitious ‘Make in India’ programme of Prime Minister Narendra Modi.

Pushing for mining sector reforms, the Cabinet is expected to take up Monday a proposal from the Mines Ministry to promulgate an ordinance to amend the Mines and Minerals (Development and Regulation) Act, 1957.

A note on “MMDR Ordinance” was circulated to various ministries with the instruction that the “concerned central ministries/departments can submit their comments on the proposal in the meeting of the Cabinet itself” considering the “urgency involved”.

“If the problems facing the mining sector are not addressed immediately, it will have far-reaching impact on the economy of the country as the manufacturing industry largely depends for raw material supply on the mining sector,” states one of the reasons for issuing the ordinance.

Mining is one of the chosen segments for the ambitious ‘Make in India’ programme of Prime Minister Narendra Modi whose government failed to get most of its investor-friendly and reform-related legislation passed in the two Houses of Parliament due to repeated disruptions.

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Citing the need for “expeditious development” of the sector, the Cabinet proposal hands out more power to the Centre, allowing it to frame rules for fixing time-limit for states to process applications for mining lease and prospecting license as well as their renewal.

In cases where there is delay in grant or renewal of mineral concessions on the part of the state government, another provision grants the Centre “revisionary powers” and “issue appropriate directions to the states”. These powers, however, will be available for the first two years from the commencement of the Act.

Another provision enables the Centre to issue directions to the state governments “for the conservation of mineral resources, or any policy matter in the national interest, and for the scientific and sustainable development and exploitation of mineral resources”. The amendment would also allow the Centre to issue separate rules for grant and regulation of atomic minerals.

The proposal provides for issuing new mining lease for 50 years with a re-auction after 50 years. These concessions would be transferrable — unlike existing concessions — to attract private investment and latest technology. The proposal allows government companies, which are entitled to get mining lease or prospecting license without going through the auction process, to form joint ventures with private companies for prospecting and mining minerals.

However, the joint venture partner would be selected only through a competitive procedure and the government company “shall always have majority ownership and control over the joint venture”.

The amendments, pending since 2011 when the previous UPA government had brought in a Bill, seek to introduce competitive bidding through the auction route for iron ore and other minerals. The NDA government prepared a new Bill, hoping to pass it in the winter session that just concluded.

The Cabinet note proposes to create a District Mineral Foundation for areas affected by mining operations where the operator will contribute one-third of the royalty it pays to the mine-owning state for the welfare of the project-affected people.

There are stricter penalties for illegal mining in the proposed amendment with up to five years imprisonment and/or up to Rs 5 lakh per hectare fine. State governments would be empowered to constitute special courts for their speedy trial.

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