Govt likely to approve mining ordinance today

The coal ministry is thinking of dropping the proposed removal of mineral exploration by private companies

The government is likely to approve an ordinance incorporating the pending Mines and Minerals (Development and Regulation) Amendment Bill, 2014, on Monday.

The proposal is for a new process of "auction by competitive bidding" for all mineral mines. According to objections, this is not practical, as it is difficult to gauge the amount of mineral present in a mine at the time of auction. More, a company cannot start mining right after an auction - it takes a long time to get other clearances, such as from the environment ministry.

However, the government appears firm on this. It has proposed a District Mineral Foundation (DMF) in every district affected by mining, "to earmark funds for the benefit of persons affected by mining and for the rebuilding of infrastructure in affected areas".

In the draft issued for public comment, the government had proposed a company owning a mine to pay a certain amount to the DMF, over and above the royalty being paid to the central government. This amount will be a fixed "percentage of the royalty paid", to be decided by the central government in the case of major minerals and the state governments in the case of minor ones. The government is likely to fix the percentage amount for DMF in case of major minerals in the ordinance itself.

The public draft of the Bill also talked about directly giving a mining lease in the case of notified minerals and a prospecting licence-cum-mining lease for non-notified ones. The government said it had sufficient data for the notified minerals and would directly award the mining leases consequently - removing the need for reconnaissance permits (RPs) completely.

This proposal has faced stiff resistance from the industry, which says the government lacks wherewithal to conduct reconnaissance operations. "It is a known fact that no investment decisions have been taken based on exploration carried out by state agencies alone," said the Federation of Indian Mineral Industries in its comments on the Bill.

The ministry is now thinking of dropping the proposed removal of mineral exploration by private companies. Giving major relief to companies already holding mining leases, the draft said companies which already have an RP or prospecting licence for an area will have the first right to refuse a lease. Any change in the rules in the ordinance regarding this issue can have serious consequences on companies holding these licenses.

The draft proposed special powers to the central government to issue directions to states "for the conservation of mineral resources, or any policy matter in the national interest, and for the scientific and sustainable development and exploitation of mineral resources".