The Union Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020 on January 10, 2020 for amendment in the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015. The amendments in these two legacy Acts would ensure the continuity of mineral production in the country which is even more significant in the light of expiring non-captive mining leases in March 2020 and the recent leases auction conducted in the state of Odisha.
The major highlight of the amendments is the newly introduced provision of seamless transfer of valid rights / approvals / clearances to the new lessee for a period of two years for minerals other than those specified in Part A & Part B of the First Schedule. With the insertion of new section 8B (after section 8A) of the MMDR Act, the successful bidders of the mining leases (both captive and non-captive) expiring under section 8A (5) & 8A (6) of the MMDR Act, deemed to have acquired all valid rights / approvals / clearances / licenses and the like; for a period of two years and can start mining operation without loss of time.
This amendment will have a significant positive bearing on the results of ongoing auctioning of non-captive mining leases. The ordinance has led to an advance auctioning of expiring leases in the state of Odisha and has eased the transition of mines to winning bidder post auction of the blocks, thereby limiting the scope of disruption in supply of critical minerals, providing raw materials to key downstream industries.
Odisha accounts for about 50-55% of India’s 210 million tonne iron ore production and leases of at least 30 of its mines were scheduled to expire at the end of this fiscal. The ordinance has certainly led to a healthy and intense bidding by top mining companies. Ascertaining the fact that almost 60-70% steel producers in India have no captive mines and are dependent on merchant miners for minerals, the capacity would have been severely impacted and under-utilized in light of the leases due to expire in March 2020. By introducing the ordinances, the Government has shown its firm commitment to avoid any disruption in supplies of critical minerals. Also, with merchant mines changing hands after decades, the amendments would create new opportunities for miners to innovate, bring in global best practices, benchmark costs and become cost competitive.
The author is Co-Chair, FICCI Mining Committee, and CEO, Alumina Business, Vedanta Ltd.