In his Independence Day speech, Prime Minister Manmohan Singh reiterated the government’s intention to “speedily convert” the Mines and Minerals Development and Regulation (MMDR) Bill, 2011, into legislation. But a closer look at the issues stalling discussions on the Bill’s key provisions shows consensus on the contentious clauses is unlikely to be reached soon.
The final blueprint of the legislation for the Bill is not ready yet. Sources say inter-ministerial bickering and differences over key provisions during the discussions of the Parliamentary standing committee on the MMDR Bill led to the delay. Differences were voiced over the provisions of profit and royalty sharing by miners with locals, reservation of mining areas for public sector undertakings and doing away with the Centre’s prior approval for grant of leases in case of scheduled minerals.
The Bill, approved in July 2011, proposes mandatory sharing of 26 per cent of profit by coal miners and 100 per cent royalty sharing by non-coal miners with the locals affected by mining operations. The industry, however, is up in arms against the move, as the proposal would take a Rs 15,000-crore toll on miners’ net incomes annually.
| VARIED VOICES Three years after the drafting of the Mines and Minerals Development and Regulation Bill, final blueprint of the legislation is not ready yet |
| Industry against the move, as the proposal would hit the miners’ bottom line by Rs 15,000 cr annually |
| Coal ministry has been demanding modifications in the Bill to bring captive miners under the ambit of benefit-sharing |
| Mines ministry is agreeable, but intends to fix compensation for coal miners at 100% of royalty paid, same as non-coal miners |
| Steel ministry, too, has raised serious objections over key reform measures proposed in the Bill |
| Corporate affairs ministry has also asked for a provision under the Companies Act for transfer of shares in mining companies for protecting the rights of affected families |
| Environment ministry has sought a provision for securing forest clearances before granting prospecting licences in forest areas |
“The MMDR Bill, in its current form, will act as a death knell for the mining industry in the country,” R K Sharma, secretary general of the Federation of Indian Mineral Industries, told Business Standard.
Despite protests by the industry, the government is determined to put the benefit-sharing proposal to effect. “The miners have completely failed to understand now, no mining can happen in this country without taking concerns of locals on board,” a senior government official close to the development told Business Standard.
The coal ministry has sought modifications in the Bill to bring captive miners under the ambit of the benefit-sharing clause. As captive miners do not engage in coal sales, it is not possible to calculate 26 per cent of their profits, to be shared with locals. The ministry has, therefore, demanded coal miners should be asked to share a certain percentage of the royalty paid as compensation.
The mines ministry had agreed to the proposal. It plans to fix compensation for coal miners at 100 per cent of the royalty paid, the same as that for non-coal miners. It has urged for an amount equivalent to the royalty, not a percentage of the royalty, as this would lead to similar demands from 73 other major mineral sectors. A decision on the matter would be taken by the standing committee on coal and steel, headed by Trinamool Congress Member of Parliament Kalyan Banerjee.
The steel ministry, too, has raised concern on key issues. It has opposed the proposals of mineral concessions and doing away with reservation for public sector undertakings and the Centre’s prior approval for mining rights. The ministry’s opposition, especially to the proposed auctioning regime, could lead to a controversy, as it follows the recent Supreme Court order cancelling 122 telecom licences for not following the auction route to allocate 2G telecom spectrum, another natural resource.
“The ministry has raised objections to the clause proposing competitive bidding for mineral concessions. We are worried even mines allocated to central public sector undertakings would be auctioned, once their current leases expire,” a senior steel ministry official told Business Standard. According to MMDR Bill, 2011, state governments, the owners of the minerals, would conduct bidding for grant of prospecting licences and mining leases for areas where the value of mineralisation is known. However, for the two initial stages of granting reconnaissance licences and large-area prospecting licences, the first-come-first-served method would be adopted.
The ministry is also miffed at the Bill’s proposal to do away with reservations for public sector companies in the allocation of mines. The proposal aims to create a level playing field for the private sector and ensure it can compete with state-owned companies in grant of concessions and boost private investment in mining. Owning a captive mine allows public sector undertakings to secure ore at the transfer price, much below the market price.
Also, the ministry doesn’t favour the provision to do away with the Centre’s power to approve the award of concessions for critical minerals, including iron ore. The government had removed the provision from the Bill, stating it was inconsistent with the idea of auctioning. The steel ministry, however, says this would lead to mineral-rich states being free to grant concessions on their own.
The corporate affairs ministry had sought a provision under the Companies Act for transfer of shares in mining companies to protect the rights of affected families. However, the mines ministry argued the objective of providing at least one share on a non-transferable basis was to facilitate a sense of ownership among locals, rather than merely providing dividend income.
The environment ministry had sought a provision for securing forest clearances before granting prospecting licences in forest areas. The mines ministry, however, argued forest clearance would be necessary only when required.
Other government departments that have asked for modifications in the Bill include the tribal affairs ministry, the drinking water and sanitation ministry, ministry of development of the North-eastern region, the Panchayati Raj ministry and the Department of Atomic Energy.
