- Lessees’ payment to NMEDT raised from 2% to 3% of royalty
- Amendment provides for trading platform for minerals
India’s mining act has been amended to allow the inclusion of areas contiguous to the mining lease of deep-seated minerals, to include production of minerals other than what the lease was granted for, and for the sale of ore from captive mines.
The amendment to the Mines and Minerals (Development and Regulation) Act, 1957, passed by the Lok Sabha yesterday, also introduces and empowers the NMET, renamed National Mineral Exploration and Development Trust, to explore offshore areas and areas outside the country. The amendment also does away with a 50% cap on the sale of ore from captive leases.
Key highlights
Mining of other areas, minerals by lessees
Holders of mining of deep-seated minerals, zinc and copper, can apply for a one-time extension of their lease area to include any contiguous area, not larger than 10% of their existing area. “Deep-seated minerals” are defined as minerals occurring at a depth of more than 200 metres (m) from the surface, with poor surface manifestations. This should facilitate optimal mining of deep-seated minerals locked up in contiguous areas, and that may not be economically viable to be extracted under a separate lease or licence, said the official note.
Similarly, a holder of a composite licence of a deep-seated mineral may seek an extension of their area, up to a contiguous area not exceeding 30% of their existing area. Extended areas will be granted on payment of an additional amount as prescribed by the central government.
Lessees can mine other minerals found in their leases, subject to payment of an additional amount, but will have to pay no additional amount if they choose to produce critical and strategic minerals occurring in their lease. This incentivises production of these minerals that co-occur sometimes, but in small quantities and are difficult to mine and process.
In case someone is applying to mine a mineral, in a lease granted for a minor mineral, then the minor lease will be terminated, and a fresh lease shall be granted with additional payment as specified by the Centre.
“Any mineral may be included under this section in a mining lease granted in respect of atomic minerals, where the grade of atomic mineral is equal or above the notified threshold value with prior approval of the central government”, says the amendment. The bill also specifies that no atomic mineral can be included in leases granted for minerals other than such atomic minerals.
NMET’s scope expanded
Additionally, the NMET is being renamed as the National Mineral Exploration and Development Trust. It has been empowered to explore and develop mines within India, in offshore areas as well as outside India, as part of the government’s efforts to secure critical minerals.
The NMET has been bestowed a corpus of INR 3,500 crore, with INR 1,000 crore accruing into this kitty every year. This will increase with the new amendment requiring miners to pay 3% of royalty, instead of the previous 2%, towards NMET/ NMEDT, which would provide an additional corpus of around INR 2,500 crore in the next five years, for activities under its enhanced scope and territorial domain. An expenditure of INR 8,700 crore in the next five years is envisaged from the trust under the National Critical Mineral Mission.
Provision for mineral trading platform
The amendment also provides for a trading platform or marketplace for minerals and its concentrated, processed form (including metals). This will allow for trading and entering into contracts and include derivatives.
“With the increased availability and demand of minerals in the country, there is a need to provide a dynamic market mechanism for minerals backed by a robust regulatory regime. Setting up of mineral exchanges will help miners and end-users of minerals in determining fair and transparent market prices based on supply and demand dynamics, stabilise markets, and aid in budgeting and planning,” stated the government.
The Centre shall appoint an authority to register and regulate mineral exchanges, levy fees and other charges, and maintain a data bank of information on activities relating to mineral trading on mineral exchanges. It expects, of course, to prevent cartelisation, insider trading, and market manipulation.
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