Coal news and updates

President clears Ordinance to amend MMDR Act

January 13: President Pranab Mukherjee on June 12 gave his assent to an Ordinance for amendment to the Mines and Minerals Development and Regulation Act, 1957 paving the way for the auction of mines of four crucial minerals – iron ore, limestone, bauxite and manganese ore – through competitive bidding, media reports said.

The Union Cabinet, chaired by Prime Minister Narendra Modi, had earlier approved the Ordinance on January 5.

Mines Secretary Dr A K Pujari, earlier on December 2, 2014, had said the ministry was planning to table a Bill in Parliament for amendment to the Act and commence auction of mines from March 2015.

However, on January 9, Pujari had told ICMW, “At that point in time our intention was to get the Bill passed in the Winter Session itself. If we had managed to pass the Bill, then we would have got two months – January and February – to work and would have gone ahead with the auction in March. But, at this point in time, it is not clear.”

Pujari pointed out that the amended draft Act aims to bring transparency into the system.

“In our country, during the past two years, there had been practically no new renewal of mining leases. I would not say that there were no renewals, but the rate at which these were being earlier given had witnessed a precipitous decline,” he had said.

Pujari pointed out that two things happen when a mine is in operation. First is that new mining leases are granted and the second is renewal of leases that have come to an end. Not only was there no issue of new mining leases. After the Supreme Court verdict in April on Goa and in May on Odisha, the second and subsequent renewal cases were completely stopped.

“The renewals were stopped because in Section 8 (3) (c) of the Act, it was mentioned that the state government has to make an order whether such renewals are necessary or are in the interest of mineral development. Till the time the state governments give the order, the mines will remain closed,” the Mines Secretary said.

“Why the orders and mining leases are held up is because these are not given by the Government of India but the state governments. They (states) are reluctant because today there is a situation in society where everybody thinks that there should be less of discretion in any decision,” Pujari said.

For example, he pointed out that if five people apply for a mine, discretion has to be used in such cases. However, people often feel, instead of discretion, something else is done so that no one can blame them.

“Therefore, transparency in decision-making can be of various types, but lack of discretion can be of only one type. If there is no discretion, then let us organise a test and whoever gets maximum marks be given the priority and so do the auction,” Pujari explained.

“Our main objective is to ensure that mines operate. Today the mines are not operating because there is no decision on new mining leases and after the apex court order about Goa and Odisha, the second and subsequent renewals have completely come to a halt,” he added.

Second and subsequent renewals are required for old mines. Initially, the lease for a mine is given for a period of 30 years and first renewal is for 20 years. So the mines which have completed 50 years come for subsequent or second renewals.

The need for taking the Ordinance route was felt as the government was finding it difficult to allocate mines or renew existing leases because the Mines Ministry could not table a Bill in the Winter Session of Parliament to amend the Act.

Industry body Federation of Indian Mineral Industries (FIMI), however, has been opposing the auction route, saying it would sound the “death knell” for the industry and may lead to cartelisation and waste.

FIMI contended that the auction route was not pursued in any resource-rich country as it may result in cartelisation and monopolistic practices.

The auction route may also lead to selective mining while leaving low-grade minerals in the ground, wastage of resources and inflate the cost of the final product, making it uncompetitive vis-a-vis imports, it had said.

Meanwhile, the Ordinance is expected to enable greater decentralisation of power to states for allocation of resources.

The Indian non-coal mining sector was facing crucial problems over the past two-three years, particularly since April 2014 after the Supreme Court order and most of the iron ore mines in the country had been closed for the last almost six months.

The previous UPA government had also brought a Bill in 2011 to amend the Act. But the Bill lapsed with the dissolution of the previous Lok Sabha.

Mines Minister Narendra Singh Tomar had earlier said the amendments were required to kick-start the sector by removing bottlenecks that are preventing the industry from becoming a growth-multiplier in the country.

The draft MMDR Bill had proposed higher prison term and a hefty penalty of Rs 5 lakh, 20 times higher than the fine prescribed in the existing ACT for violating the terms of mineral excavations.

Though mining is a state subject, the Bill sought to empower the Centre to prescribe different terms and conditions for auctions of different types of minerals and their applications to different states.

It also looks at paving the way for leases to be easily transferable.