The government has placed before Parliament an amendment bill that should ease iron ore supply and hasten auction of more mineral deposits.
These proposed reforms, that SteelMint had listed out in the past, were cleared by the Cabinet in two tranches. They address the fallout despite the auction of about two dozen of working iron ore mines among the hundreds of merchant lease that lapsed on 31 March 2020. The changes to the MMDR Act, up for Parliament’s consideration, aims to free up more areas locked under a provision that had no sunset clause. It also allows the Centre to play a more direct role in auction of a natural resource considered a property of the state – a move that several state governments have objected to.
Increase production and maintain continuity
In the future no mine will be auctioned as “captive”. Existing mines, allotted for captive use, will be allowed commercial sale of up to 50 per cent of their production. This is also available to coal mines, except those allotted to a company or corporation awarded a power project on the basis of competitive bid for tariff (including Ultra Mega Power Projects).
This should facilitate supply minerals and stabilize prices of ore in the market, said the Mines Minister’s accompanying note. As will the replacement of “mining operations” with “production and dispatch.”
The amendments also provide legal backing to the Centre’s solution to the recent iron ore crisis, roping in government-owned companies to operate leases that could not be auctioned successfully. Something it has already executed by getting Odisha Mining Corporation to run the Guali and Jilling-Lagalota iron ore mines.
The Centre has retained rights to curtail or extend these “short-term” grants (of 10 years) as and when it pleases. PSUS whose leases are being extended (and not auctioned), such as NMDC’s Donimalai in Karnataka, will also have to part with an additional revenue share or premium.
A successful bidder will inherit all the clearances granted to the deposit until the end of his term, provided he carries on at the same capacity. The government had only extended clearances for two years earlier. Miners, unable to begin production for reasons beyond their control, will now get an additional year to get started. The transfer of non-auctioned leases is also being made easier.
The doors also being shut on claims that survived the 2015 amendment to the mining Act but were not granted because says the Minister, they are anachronistic and antagonistic to the auction regime. The Centre expects to auction these areas – mostly virgin – even as the claimants wait to be heard by the Supreme Court. These bill should also free up areas lying non-operationalised by Government-owned companies.
The Centre’s also changing its position on what it believes is “illegal mining”. The section under which Odisha, directed by the SC, claimed recovery of INR 17,000 crores for environmental violations will now apply only to violations of the MMDR Act or for mining without or outside of a leasehold.
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