Court order on DMF hits developmental kitty of mineral rich districts

The mine owners were asked to contribute an amount equal to 30% of their royalty payment obligation to District Mineral Foundation

The Odisha government's plan to collect about Rs 1,500 crore from mine owners by the end of March, 2016 towards their contribution to the District Mineral Foundation (DMF) has hit the wall with Delhi High Court restricting the government authorities to take any coercive action to collect the fund.

The Mines and Mineral Development and Regulation (amendment) Act, 2015 had stipulated that all mineral rich states would constitute DMFs for the districts where mining activities are being carried out with contributions from mine owners operating in that district.

While mine owners were asked to contribute an amount equal to 30 per cent of their royalty payment obligation to DMF, the money collected on this head was supposed to be spent on various developmental activities at the local level.

 

The mine owners, who were unhappy with the imposition of this new levy as they felt it would push up their cost in a depressing commodities, were particularly peeved when the Union mines ministry came out with a notification in September, 2015 asking the miners to pay their contribution to DMF with retrospective effect from 12 January, 2015 when the new MMDR Act was enforced.

The Federation of Indian Mineral Industries (FIMI), representing the mine owners, had gone to the Delhi High Court against the notification.

The court, while issuing notices to the respondents, said, "no coercive steps shall be taken" pursuant to the impugned order of the Union government dated September, 16, 2015 to the extent that it directs establishment of DMF retrospectively from January 12, 2015.

The miners argue that in the case of coal, the ministry of coal has asked the owners of coal blocks to pay to DMF from the date of issue of notification or constitution of DMF (whichever is later), whereas the mines ministry has asked the lessees of other major minerals to contribute to DMF retrospectively.

Meanwhile, most of the mine owners are waiting for the final disposal of the case before making their full contribution to the DMF, in the process hitting the collection of funds for developmental work in many backward mineral rich districts in resource strained states like Odisha.

"The court has not stayed the notification of the mines ministry on DMF, it has just said no coercive action shall be taken for collection of funds. We hope miners would contribute to DMF in time", said Deepak Mohanty, director mines, Odisha government.

But the collection figures hint at the hesitation among miners to give their contribution. By the middle of March, only Rs 100 crore was collected towards DMF in Odisha out of the expected amount of Rs 1500 crore. Most of this amount has again come from coal companies with the other miners shying away.