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Home / IAS Preparation / Mines and Minerals Amendment Bill 2021

Understanding the Mines and Minerals Amendment Bill 2021: Objective, Concerns & More!

Last Updated on Jan 07, 2024
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The Mines and Minerals (Development and Regulation) Act 1957, has long been the backbone of India's mining sector. However, before 2015, the industry faced challenges related to allocation, transparency, and obstacles to attracting investments. The 'first come, first serve' method, which governed mineral resource allocation, was considered discriminatory and lacked transparency. The renewal process for mining leases also hindered investment, resulting in a slowdown in the sector. This downturn ripple effect on downstream manufacturing, which heavily relies on raw materials from mining. 

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India embarked on a series of mining sector reforms to address these issues and stimulate economic growth, culminating in the Mines and Minerals (Development and Regulation) Amendment Act 2021.

What is the Mines and Minerals Amendment Bill?

The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, was presented in the Lok Sabha on July 26, 2023. This bill seeks to modify the Mines and Minerals (Development and Regulation) Act of 1957, which governs the mining sector. The Act categorizes mining-related activities into three main types: 

(i) surveillance, involving a preliminary survey to assess mineral resources, 

(ii) prospecting, encompassing the exploration, location, or verification of mineral deposits, and (iii) mining, the commercial extraction of minerals.

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Objectives of MMDR Amendment Bill, 2021
  • Transparency in the Auction Process:
    • The bill, passed by a voice vote, aims to enhance transparency in mine auction processes.
  • Enhancing Employment:
    • The primary goal is to generate employment in the mining sector.
    • According to the Ministry of Mines, reforms are expected to create approximately 55 lakh direct and indirect jobs.
  • Attracting Domestic and Foreign Investment:
    • The amendment seeks to attract domestic and foreign mining sector investment.
    • Encourages the use of safe and effective technology in mining.
    • Allows 100% Foreign Direct Investment (FDI) under the automatic route for the sale of coal, including mining activities and associated processing infrastructure.
  • Increasing Contribution to GDP:
    • It aims to raise the mining sector's contribution to the GDP to at least 2.75%.
  • The current contribution stands at around 1.75%.

The Reason for Reforms and Amendments

India's mining sector plays a pivotal role in its economy, employing approximately 1.1 crore people directly and indirectly, with the potential to double job opportunities in the next five years. In the financial year 2018-19, mining contributed around Rs 4.10 lakh crore to India's GDP. The objective is to boost this contribution to Rs 8 lakh crore by fiscal year 2024-25, aligning to achieve a $5 trillion economy (Atmanirbhar Bharat). The Mines and Minerals (Development and Regulation) Amendment Act 2021 aims to revitalize the mineral sector, promote job creation, and propel economic growth.

Key Features of the Mines and Minerals (Development and Regulation) Amendment Act 2021

One of the central features of the amendment act is to boost mineral production. It does so by removing the distinction between captive and merchant mines. Under the new rules, all captive mines can sell up to 50% of the minerals produced after fulfilling the plant's requirements. Additionally, future auctions will no longer have end-use restrictions, promoting transparency and efficiency.

Removal of End-Use Restrictions

The amendment act empowers the government to reserve mining blocks for leasing through auctions, specifying the end-use (e.g., iron ore mining for a steel plant). However, it eliminates the reservation of mines for particular end-uses. This change facilitates flexible allocation based on market demand.

Facilitating Business Ease

The amendment act introduces several provisions to promote ease of doing business in the mining sector. Notable changes include:

  • Even after termination, the continuity of statutory clearances of expired mining leases ensures uninterrupted mining operations.
  • The transfer of all mineral concessions without charges reduces administrative hurdles.
  • Clearer definitions, such as "without lawful authority," make it easier to enforce mining regulations.

Structural Reforms

To further streamline operations, the central government can conduct auctions where states face difficulties or fail to meet deadlines, working in consultation with state governments. Additionally, the second schedule of the Mines and Minerals (Development and Regulation) Act, 1957, has been amended to specify royalty rates for certain minerals and metals.

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Implications of the 2021 Amendment

The amendment act carries significant implications for the mining sector:

Removing Captive and Merchant Mine Distinctions

  • Eliminating the distinction between captive and merchant mines promotes optimal mining, enhancing state revenue. Auctioning mines without end-use restrictions encourages industrial development near mining sites, benefiting remote regions.

Re-Allocation Opportunities

  • The amendment opens up more blocks for auction, increasing state revenues through premium bids.

Time-Bound Production and Dispatch

  • Substituting "mining operations" with "production and dispatch" ensures timely commencement and continuity of mining activities, improving mineral availability in the market.

Streamlined Statutory Clearances

  • The act ensures that statutory clearances for expired mining leases continue after termination, minimizing administrative bottlenecks and eliminating the need for repeated approvals.

Boosting Mineral Exploration

  • The amendment accelerates mineral exploration and technological advancements by creating a level playing field for public and private entities. The National Mineral Exploration Trust (NMET) will become autonomous, fostering collaboration between public and private organizations. Seamless prospecting licenses cum mining leases streamline mining and exploration activities.

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Concerns Related to MMDR Amendment Bill, 2021
  • Environmental Concerns:
    • While beneficial for the country's development, the amendments in the act raise environmental concerns associated with the mining sector.
    • Mining is recognized as environmentally harmful.
  • Impact on Tribal Communities:
    • Mining zones often overlap with the habitats of several tribal communities, including Particularly Vulnerable Tribal Groups (PVTGs).
    • The increase in mining threatens their residences, raising issues related to rehabilitation and compensation.
  • Central Government Intervention in State Matters:
    • The auction of mines, a process mainly under state government jurisdiction, could lead to ambiguity, especially in cases where different political parties govern at the centre and state levels.
    • State governments may resist fixed royalties for lease extensions to government companies, fearing reduced revenues compared to a transparent auction process.
    • The central government's involvement in directing expenditures from district mineral funds concerns states.

Conclusion

The Mines and Minerals (Development and Regulation) Amendment Act of 2021 aims to harness the full potential of India's mineral sector, generate employment, attract investments, and stimulate economic growth. With a focus on time-bound operationalization, exploration of mineral resources, and increased revenue for states, this amendment sets the stage for a vibrant and robust mining industry in India.

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Mines and Minerals Amendment Bill 2021FAQs

The bill aimed to address issues related to mineral resource allocation, transparency, and obstacles to attracting investments in India's mining sector.

The amendment act facilitates ease of doing business by ensuring the continuity of statutory clearances for expired mining leases, allowing the transfer of mineral concessions without charges, and providing clearer definitions for enforcement.

Removing this distinction promotes optimal mining, increases state revenues, and encourages industrial development near mining sites, particularly in remote regions.

The act accelerates mineral exploration by creating a level playing field for public and private entities, establishing NMET as an autonomous body for collaboration, and streamlining prospecting licenses cum mining leases.

The primary goal is to harness the full potential of India's mineral sector, generating employment, attracting investments, and stimulating economic growth in line with the Atmanirbhar Bharat initiative.
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