- Auction regime to replace anti-hoarding safeguards
- Mining companies allowed scale without statutory ceilings
The Centre has proposed to do away with limits to how much area an individual company can hold mining rights to. This limit, provided for under Section 6 of the Mines and Minerals (Development and Regulation) Act would be a deterrent to monopolistic control, or squatting on areas without producing any mineral.
This area limits, mineral-wise and state wise, continued to be applied, and revised, on the request of various state governments even after auctions were introduced, as the only means to allocate was mandated for mining rights after MMDR amendment in 2015. Now, after a decade of auctions and other regulations, the Ministry believes it is no longer necessary, and in fact “sometimes becomes hurdle in auction of blocks, reducing the number of potential bidders in the auction.”
“Removing area limits will increase the participation in auction of ML and composite licence (i.e., PL-cum-ML) resulting in more competition, remove delay in auction of blocks, attract more investment in the sector, including from international mining companies, and allow mining companies to achieve economies of scale as well as global competitiveness,” says a 1 January government announcement calling for stakeholder comments.
The first proposed amendments of 2026 to the MMDR, which has been consistently tweaked to facilitate transition and in response to the market, also proposes a reduction of the period of prospecting licence, provided for under Section 7 of the MMDR Act.
Since 1994 its prescribed prospecting licence and reconnaissance permit not exceed three years (extendable by state governments by) another two years.
The government says there has been considerable transformation in mineral exploration technologies, breakthroughs in remote sensing, geophysics, geochemistry, computer modelling and use of artificial intelligence, and drilling technologies, that have made exploration faster, more accurate, and more environmentally responsible.
The government has amended the forest laws (Van (Sanrakshan Evam Samvardhan) Adhiniyam, 1980) in 2023 to treat survey, such as, reconnaissance; prospecting, investigation or exploration including seismic survey as ‘non-forest’ activities not requiring forest clearance. The Ministry of Environment, Forest and Climate Change (MoEFCC) also recently streamlined the terms and conditions and the approval process for allowing exploration of minerals in forest area.
The Centre, which auctions exploration licenses of critical minerals, now proposes that it do it for all minerals. ELs were introduced into the Act in August 2023 inter alia to provide for grant of exploration licence to 29 critical and deep-seated minerals specified in Seventh Schedule to the Act. Looking at the inaction and failure of state governments to auction these, the Centre through an order dated 21.10.2024 decided to conduct them directly. It now proposes an amendment to section 10BA of the Act to allow the Central government to auction EL blocks of other minerals.
For now the area limits of EL is being retained at the current limit of 5,000 sq.km.
Under Section 6 of the MMDR Act, each holder can hold rights to a maximum area limit in respect of any mineral or prescribed group of associated minerals in a state. The current limit, modified a few years ago, stands at 10,000 sq.km. for reconnaissance permit (RP), 5,000 sq.km. for exploration licence, 25 sq.km. for prospecting licence (PL) and 10 sq.km. for mining lease (ML).
The provision under the Act empowers the Central government to increase the area limits in respect of PL or ML. Clause (c) of section 6 (subsection 1) further provides restrictions on grant of mineral concession in respect of any area which is not compact or contiguous unless the state government permits such a grant “in the interests of the mineral development”.
The Ministry note explains that since the introduction of the auction regime in 2015, various state governments have requested the Centre to increase area limits for various reasons, mostly to increase participation of bidders in auction of blocks.
Comments and suggestions to the government’s proposed changes are expected on or before 22 January.
Leave a Reply