Tag Archives: Mining Ordinance

Mining Ordinance

Indian Govt. has issued a gazette notification on 12th January 2015 to amend the Mines and Minerals (Development and REgulation), Act, 1957

Copy of the gazette notification is available here i.e. http://egazette.nic.in/WriteReadData/2015/162362.pdf

Economic Times article giving details of the Ordinance is available here

http://articles.economictimes.indiatimes.com/2015-01-13/news/58024682_1_leases-essel-mining-mining-companies

The government on Tuesday promulgated an Ordinance amending mining laws under which all iron ore, bauxite, limestone, and manganese mines will henceforth be auctioned.

The Modi government is believed to have identified reforms in mining, along with coal, insurance and land as critical enough to require ordinances to push them through rather than wait for the Budget session of Parliament. The mining Ordinance was signed by President Pranab Mukherjee on Monday.

The Ordinance seeks to remove discretion, and encourage investment in mining by offering 50-year lease periods, by throwing open areas tenfold the current limits and allowing trade of mining rights. It is also offering prospecting cum mining lease, an idea borrowed from an earlier UPA-II drafted MMDR Bill that lapsed, to encourage greater exploitation of India’s mineral resources.

All existing miners can continue operating until the lease is 50 years old after which the mines will be put up for auction. But, in order to avoid disruption, companies with mining leases more than 50 years old can operate till 2020, which goes up to 2030 if the leases were granted for captive use. Beyond these time limits, these mines too will be up for auction.This should come as a breather to many such mines across the country that had shut after the Supreme Court decided that leases could not continue in perpetuity under so-called deemed extensions. Eighteen mines in Odisha, including Stemcore, Mesco Steel, KJS Ahluwalia Group, Rungta and Tata Steel, can continue operating. Earlier, the Odisha government had moved to cancel these leases, but it may no longer have the powers to do so after the Ordinance comes into force. Other mines such as all the leases that Goa has managed to renew in the recent past, including Sesa Goa’s, will run till the end of their lease term, or about 2027.

Auction has come to be seen as the preferred method to allocate natural resources after two Supreme Court judgements — commonly referred to as the coal judgement and the 2G judgement. A senior official in the mines ministry said that the era of “rent seeking and pocket veto” that discouraged investment in the sector and a huge backlog of applications would come to an end. The Centre now also has powers to intervene where the state has not passed an order in a prescribed time. The mines ministry argues that it is only to encourage states to take timely decision. Officials of some mining companies expressed reservations about aspects of the Ordinance.

The managing director of Goa’s Fomento Resources, Ambar Timblo is against only steel and aluminum makers, or captive users, being allowed right of first refusal when such mines came up for auction. “It will not necessarily help fetch the highest prices. The merchant miner must also deserve to get the right of first refusal for all the infrastructure investments he has made,” said Timblo.

The Federation of Indian Mining Industries, representing merchant miners such as Rungta Group and Aditya Birla firm Essel Mining, agrees.

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