19th March 2021 – Editorials/Opinions Analyses

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Contents

1. MMDR Amendment Bill, 2021 Explained

MMDR AMENDMENT BILL, 2021 EXPLAINED

Context:

Coal and Mines Minister has introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 in Lok Sabha to streamline the renewal of the auction process for minerals and coal mining rights.

Relevance:

GS-III: Industry and Infrastructure (Government Policies and Interventions for Development of Mining Sector)

Mains Questions:

Enumerate the changes brought about the provisions of the Mines and Minerals (Development and Regulation) Amendment Bill, 2021. To what extent will this bill address the issues in India’s Mining Sector? (15 Marks)

Dimensions of the Article:

1. About Mining Sector in India
2. Control of Mining and Minerals sector in India
3. Mines and Minerals (Development and Regulation) Act (1957)
4. Key Changes in the MMDR Amendment Bill, 2021
5. Advantages of the Amendments proposed in the bill
6. Issues in the Mining Sector of India
7. Way Forward

About Mining Sector in India

• India produces as many as 95 minerals including 10 metallic and 23 non-metallic minerals and India has large reserves of iron ore, bauxite, chromium, manganese ore, baryte, rare earth and mineral salts.
• Indian subsoils are rich in onshore and offshore crude oil and gas, coal, iron ore, copper, bauxite, etc.
• The mining sector’s contribution to the GDP is around 2.5% at present.
• Barely 20% of the geographical area of India under mining lease (other than fuel, atomic and minor minerals) is Mined.
• With several mineral deposits, India ranks top 10 in the production of coal, iron ore, chromite, mica, and bauxite.

Control of Mining and Minerals sector in India

• Amongst the subjects given under the Union List in the Seventh Schedule of the Indian Constitution, we have:
• Entry 53: Regulation and development of oilfields and mineral oil resources; petroleum and petroleum products; other liquids and substances declared by Parliament by law to be dangerously inflammable.
• Entry 54: Regulation of mines and mineral development to the extent to which such regulation and development under the control of the Union is declared by Parliament by law to be expedient in the public interest.
• However, in the State list, there is Entry 23: Regulation of mines and mineral development subject to the provisions of List I with respect to regulation and development under the control of the Union.

In the federal structure of India:

1. The Central Government is the owner of the minerals under the ocean within the territorial waters or the exclusive economic zone of India; and
2. The State Governments are the owner of minerals located within the boundaries of the State concerned.

The State Governments grant the mineral concessions for all the minerals located within the boundary of the State, under the provisions of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR) and Mineral Concession Rules, 1960 (MCR) framed thereunder

Exception:

However, Prior Approval of the Central Government is required in some cases:

• for minerals specified in the First Schedule (such as hydrocarbons, atomic minerals and metallic minerals such as iron ore, bauxite copper ore, lead precious stones, zinc and gold) of the Mines and Minerals (Development and Regulation) Act, 1957
• for granting the mineral concession.

Mines and Minerals (Development and Regulation) Act (1957)

• The Mines and Minerals (Regulation and Development) Act (1957) regulates the mining sector in India and is applicable to ALL minerals EXCEPT Minor Minerals and Atomic Minerals.
• It details the process and conditions for acquiring a mining or prospecting licence in India, although, mining minor minerals comes under the purview of state governments. (According the Panchayats (Extension to Scheduled Areas) Act, 1996 (PESA), it is mandatory to have recommendation of Gram Sabha and Panchayats at appropriate level prior to grant of prospecting licence or mining lease for minor minerals and for grant of concession for the exploitation of minor minerals by auction in the Scheduled Areas.)

Key Changes in the MMDR Amendment Bill, 2021

• The amendment proposes to allow captive miners of both coal and other minerals to sell up to 50 per cent of their production after meeting the requirements of the end-use plant and on paying additional royalty to the state government. Operators are currently only allowed to use coal and minerals extracted from captive mines for their own industrial use.
• The amendment proposes to fix additional royalty payments to states for the extension of mining leases for central public sector enterprises. Disagreements over the additional royalty to be paid has resulted in suspension of operations for long durations in the past.
• The central government can reserve any mine (other than coal, lignite, and atomic minerals) to be leased through an auction for a particular end-use (such as iron ore mine for a steel plant) – known as captive mines, under the MMDR Act 1957. The Bill empowers the central government to specify a time period for completion of the auction process in consultation with the state government.
• The Bill adds that mines (other than coal, lignite, and atomic minerals), whose lease has expired, may be allocated to a government company in certain cases.

Advantages of the Amendments proposed in the bill

• The increased flexibility as proposed in the MMDR Amendment bill would allow miners to maximise output from captive mines as they would be able to sell output in excess of their own requirements.
• The mining industry players will welcome the move that allows Central Government to conduction auctions in case the state government fails, as it would likely lead to greater transparency in the auction process as there is a perception that state governments may in some cases prefer some bidders, and try to delay or cancel mining rights if their preferred bidders do not win mining rights.

Issues in the Mining Sector of India

Issues of Governance

• Illegal mining and illegal practices in legal mining are rampant.
• In the past three financial years until 2021 – the mines department has registered almost 40 thousand cases of illegal mining.

Environmental and Pollution issues

• Mining requires environmental clearances from various agencies yet even today mining activities are taking place in highly ecologically sensitive areas, reserved forests, wildlife sanctuaries and protected areas such as the Himalayas, the Aravalis and along the coasts and shorelines.
• “Fugitive dust” is generated from almost every mining operation, particularly from open cast mining, drilling, blasting, hauling, loading and unloading, transporting, crushing and other beneficiation processes leading to lung related diseases.

Issues of displacement and rehabilitation

• Most of the mining areas are located in remote and poorly developed regions, inhibited by marginal sections of the society. The mineral exploitation thus results in large-scale uprooting and further impoverishment of communities.

Social issues

• Studies on quality of life of coal mining complexes have revealed that these areas are not socially and economically developed even though the levels of economic activities have increased manifolds.
• UNICEF estimates that approximately 20 percent of mine workers are children.
• Young girls earn less than any other group of employees in mining, making them particularly attractive to businesses driven by profit.

Health issues

• In and around the lead-zinc mines, the ions of these metals in the air lead to lung related diseases. Their excessive presence in the soil may enter the food chain and cause a large-scale impact.
• The silica dust in and around sandstone mines is the cause of silicosis (also known as grinder’s disease).
• The cement industry is a major source of particulate matter, SOx, NOx, COx emissions and Cement dust contains heavy metals like nickel, cobalt, lead and chromium which are pollutants hazardous to the biotic environment.

Way Forward

• Mining is a process that leaves wastages and has large-scale impacts; therefore, the laws have to be strictly followed and loopholes in these laws have to be plugged.
• There is an urgency to develop a proactive approach which is economically viable, developmentally sustainable, socially acceptable and environmentally feasible- and this can be done by suitable legislations.
• The mining sector provides raw materials to fast-growing sectors like infrastructure and automobiles that would further generate demand for power and steel in the country – hence, an advancement in this sector gives a boost to the associated industries and leads to the overall development of the region.
• It is a labour-intensive sector and provides employment for both unskilled labour and skilled labour and being a part of the primary sector, it largely provides unskilled jobs. Hence, adopting global practices in operations and ensuring safe working conditions for workers in the mining sector is absolutely necessary.
• A proper regulatory framework is necessary for judicious utilisation of mineral resources without damaging the environment. Proper Environmental Impact assessment (EIA) and Social Impact Assessment (SIA) must be conducted before allocating the projects, and the adherence to the conditions must be strictly followed.

-Source: Indian Express

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