Centre expands area limits by over 4x to boost critical minerals mining

The Centre has increased the area granted to individual players by more than four fold in order to boost mining of critical minerals. Issuing an order on Tuesday, the government said, for mining leases, the area has been expanded from the current limit of 10 sq km to 50 sq km. For prospecting licences (granted in the case of composite licence), the limit has been increased from 25 sq km to 100 sq km.

“The Central Government, in exercise of the powers conferred under the proviso to clause (b) of sub-section (1) of section (6) of the MMDR Act, 1957, hereby increases the area limit for prospecting licence and mining lease in respect of each of the 24 critical minerals listed in Part-D of the First Schedule to the MMDR Act, 1957, to 100 sq km and 50 sq km, respectively, for each of the States (sic),” the order said.

The move comes after the Centre faced a setback in its initial auction of critical mineral blocks earlier this year. Business Standard first reported about the move on July 14. A total of 28 blocks out of the 38 announced in the first two auctions were annulled by the Centre due to lack of interest from potential bidders.

This policy shift aims to address the unique challenges associated with mining critical minerals, which are often found in deep-seated deposits and have a lower recovery rate compared to bulk minerals like limestone and iron ore.

Originally, the area limits were set under the Mines and Minerals Development and Regulation (MMDR) Act to prevent cartelisation in the mining sector.

However, given the strategic importance of critical minerals for various industries and national security, the government has decided to revise these limits.

“Critical minerals require extensive exploration and extraction efforts due to their deep-seated nature and low recovery rates from ore. Increasing the permissible area for mining and prospecting is crucial to make these operations economically feasible,” said an official, adding that the decision has been taken within the ambit of the MMDR Act.

The MMDR Act gives the Centre the power to increase the area but only if it is in the interest of development of a mineral or the industry.

As the Centre increases the area for individual players, sector experts emphasise the need to enhance technology to fully extract minerals from the mines.

“There is an alarming trend of using broad terms such as ‘strategically important’ and ‘national security’ to support certain sectors or industries. And then, selectively relaxing environmental compliances and public scrutiny,” Debadityo Sinha, lead for climate and ecosystems at Vidhi Centre for Legal Policy, had told Business Standard.