Date: 28/09/2022

Relevance: GS-3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Key Phrases: area caps for mining, Mines and Minerals (Development and Regulation) Act, 1957, Reconnaissance Permit (RP), Prospecting License (PL), Mining Lease (ML).

Context:

• The Union government is preparing to set out area caps for mining as it aims to carve out smaller mining areas to attract more investors.
• Let us delve deeper into the issue of mining and area caps in India.

Background

• Ministry of Mines is responsible for survey and exploration of all minerals, other than natural gasses, petroleum and atomic minerals, for mining and metallurgy of non-ferrous metals like aluminum, copper, zinc, lead, gold, nickel, etc. and administration of the MMDR Act, 1957 in respect of all mines and minerals other than coal, natural gas and petroleum.
• The move will also prevent vast tracts of land irregularly ending up with a few miners, which would undermine the very purpose of auctioning mineral concessions through a fair and transparent mechanism.
• All states will have to follow the area limits for various minerals including iron ore, diamond, bauxite, gold and copper while auctioning resources, and changes would require permission from the Center.
• Depending on the kind of mineral mined, states can set aside 25-400 sq. km for a prospecting license (PL), and 10-25 sq. km for a mining lease (ML).
• The changes will be made through an amendment of the Mines and Minerals (Development and Regulation) Act, 1957.

Mines and Minerals (Development and Regulation) Act, 1957

• It was enacted to regulate the mining sector in India. It forms the basic framework of mining regulation in India.
• It applies to all minerals except minor minerals and atomic minerals. It details the process and conditions for acquiring a mining or prospecting license in India.
• Mining minor minerals comes under the purview of state governments. River sand is considered a minor mineral.
• For mining and prospecting in forest land, prior permission is needed from the Ministry of Environment and Forests.

Mineral Potential of India

• India has the same mineral potential as South Africa and Australia. It produces 95 types of minerals but despite this huge mineral potential, the mining sector of India still remains underexplored.
• The mining sector contributes around 7 to 7.5% of the GDP of countries like South Africa and Australia whereas it is only 1.75% in India.

Regulation of Minerals in India

• The State Governments are the owners of minerals located within the boundary of the State concerned. They grant mineral concessions for all the minerals located within their boundary.
• However, for minerals specified in the First Schedule to the MMDR Act approval of the Central Government is necessary eg. Coal and lignite, minerals of the “rare earths” group containing Uranium and Thorium.
• District Mineral Foundations are statutory bodies in India established by the State Governments by notification. They derive their legal status from the MMDR Act, 1957.
• District Mineral Foundation is to work in the interest of the persons and areas affected mining related operations.
• The Central Government is the owner of the minerals underlying the ocean within the territorial waters or the Exclusive Economic Zone of India.
  • International Seabed Authority (ISA) is the organization through which States Parties to UNCLOS organize and control all mineral-resources-related activities in the Area for the benefit of mankind as a whole.
• The Central Government notifies certain minerals as ‘minor’ minerals from time to time for which the absolute powers for deciding on procedures of seeking applications for and granting mineral concessions, fixing rates of royalty, dead rent, and power to revise orders rest only with the State Government.
• Examples of minor minerals include building stones, gravel, ordinary clay, and ordinary sand.

Mining Process

• In the mining process, the government first identifies large areas that could have probable mineral reserves, and offers them to companies for initial testing.
• Once the probable mineral resource is established, a PL is given, where licensees get to do more exploration to establish possible mineral resources.
• Then, they apply for an ML for a particular area to extract the resource.
• Essentially, PL is granted for undertaking “prospecting operations” to explore, locate or prove mineral deposits, while ML is granted for the actual mining operation.

Latest Developments

• The government is looking to fix area restrictions in the legislation itself to give stability to area limits and avoid the need for frequent amendments.
• Smaller mineral areas are expected to attract more investors and boost mineral production.
• Also, such limits may aid the growth of the mining industry, where large-scale sustainable production is imperative along with equitable distribution of resources.
• The limits will not apply to earlier PLs and MLs, and where letter of intent upon auction has been issued, or reservation of mineral areas have been made.
• Such contracts will continue till the expiry of concession period, but any new concessions must follow the new area limits.
• The limits were finalized based on the recommendations of a mines ministry committee led by the director general of Geological Survey of India with experts from the Indian Bureau of Mines.

Prospecting License and Mining Lease Area Limits

• While PL area limits for bauxite, gold and associated minerals and limestone have been kept at 50 sq. km, ML limits have been kept at 20 sq. km, 10 sq. km and 25 sq. km respectively.
• For diamonds, the PL area limit has been fixed at 400 sq. km for all states, ML could be given a much smaller area of just 10 sq km.
• The area limits for iron ore have two sections – one for Odisha that has large contiguous resource-bearing areas and the rest of the country.
• So, while iron ore PL for Odisha is a tad higher at 50 sq. km, for other states, the limit is kept at 25 sq km.
• The iron ore ML area limit is also 20 sq. km against 10 sq. km for other states.
• For atomic minerals and others like coal, chromite, manganese the PL limit will be 25 sq. km while ML will be given only for 10 sq. km.

Way Forward

• Under existing Section 6 of MMDR Act, the limit is 10,000 sq. km for reconnaissance permit (RP), 25 sq km for PL and 10 sq km for ML.
• The section also empowers Center to increase these limits, which have been increased several times following requests by state governments especially for public sector units.
• The changes in area limits under this regulation changed the same for new PLs and MLs and distorted the entire system. The amendment would attempt to change this.

Source: Live-Mint

Mains Question:

Q. The Union government is preparing to set out area caps for mining as it aims to carve out smaller mining areas to attract more investors. Discuss the possible impacts of such a move. [150 Words].