Union Cabinet Approves Reforms in Mining

The Union cabinet approved reforms in mining. This will help double mineral production in the next four-five years.

The amendments do away with the distinction between captive and non-captive mines and allowing transfer of mining leases. It will also remove restrictive end-use conditions on captive mines and resolve legacy issues, which will help bring more blocks to auction.

This will allow the auction of more than 500 mines for gold, diamond, platinum, copper, zinc and lead among others. It will eventually attract big-ticket investments from mining giants.

The cabinet meeting chaired by Prime Minister Narendra Modi approved structural reforms in the mining sector through legislative amendments to the Mines and Mineral (Development and Regulation), 1957, or MMDR Act, said a person aware of the development.

This reform will allow the mining companies who are allocated for captive use to sell up to 50 percent of minerals excavated in a year. As several mining leases are currently stuck in legacy cases and can neither be granted nor be brought to auction due to legal impasse, this reform will help both the parties resolve issues faster. Companies will get incentives for early production from blocks to be won in auction under the proposed changes.

In order to boost exploration, there will be a review of the functioning of the National Mineral Exploration Trust, which will be made an autonomous body.

No charges will be levied on those wanting to transfer non-auctioned mines, which will ensure that leases not being exploited are sold or transferred to those willing to bring in investment. However, the government companies will now be levied charges on the extension of mining leases to create a level playing field in the sector.

The cabinet also approved legislative changes for the reallocation of non-producing blocks owned by the government companies, a comprehensive licence for exploration and production, avoidance of double taxation, clarity in illegal mining, setting up a national mineral index and joint auctions of bauxite and coal mines for the aluminium sector, and local utilization of the district mineral fund.

The other major objective of the reforms is to generate huge employment opportunities, reduce imports and increase production by brining large mineral blocks into auction.

Last month, the government said that the country’s mining sector will see hectic activity in the new year.