Repealing certain MMDR Act sections to send wrong signal to investors: FIMI

The repealing of certain sections of the MMDR Act amounting to cancellation of mining leases already granted would send a wrong signal to both domestic and global investors, said FIMI

The repealing of certain sections of the MMDR Act amounting to cancellation of mining leases already granted would send a wrong signal to both domestic and global investors and result in multiple litigations in courts, miners' body FIMI has said.

The statement comes in the wake of the mines ministry proposing to amend provisions related to grant of prospecting licence and mining leases, and allocate such mineral blocks through transparent method of auction.

"The proposal to amend the Act (MMDR) for repealing Section 10A(2)(b) is not at all desirable which otherwise may prove to be counter-productive for the mineral development of the country," FIMI said in its comments on the proposed mining reforms of the mines ministry.

"If the cases saved under Section 10A(2)(b) are cancelled, it will mean that government...has faltered on its Act and will lead to irreparable loss of investor confidence in Indian mineral sector, apart from multiple litigations in courts resulting in such an exercise of the government being rendered completely futile," it said.

This will also send a wrong signal to both domestic and international investors about certainty in India's mineral policy, FIMI said.

The mines ministry had earlier sought comments from stakeholders on some reform proposals, including amending the provisions of 10A(2)(b) and 10A (2)(C) of the Mines and Minerals (Development and Regulation) Act.

The amendment in the said provisions would pave way to auction of around 500 leases which are stuck in legacy issues now.

Section 10A(2)(b) pertains to the leases where reconnaissance permit (RP) or prospecting licence (PL) were granted and 10A(2)(c) relates to grant of mining leases (ML).

"The proposal to amend the Act for repealing Section 10A(2)(b) is not at all desirable which otherwise may prove to be counter productive for the mineral development of the country.

As such the existing RP/PL holders have invested huge resources and put long years to undertake risky exploration activities and have helped India to discover valuable mineral deposits.

Acknowledging their valuable contribution to the country, the government had introduced Section 10A(2)(b) in 2015 to guarantee these concessionaries the right to mine the deposit," FIMI said.

As regard the proposal of scrapping Section 10A(2)(c), the Act provided only two years to applicants possessing Letter of Intent (LoI) to obtain statutory clearances and execute mining lease.

Many of the genuine cases could not be converted into grant of ML within the stipulated time-frame of two years.

"Since grant of statutory clearances take up to 35 years and were beyond applicants' control, as many as 196 applications saved under Section 10A(2)(c) expired.

"It is gathered that many of such cases are sub judice pending at various courts including Supreme Court, hence it is suggested that Section 10A(2)(c) may be amended by extending the timeline for another five years till January 2022 for grant of mining leases to such deserving concession holders," FIMI said.