MMDR reforms to give new LIFE to the mining segment

Industry Outlook Team | Tuesday, 06 April 2021

Structuring a post-Covid-19 world needs grit, perseverance and a vision—precisely everything that makes up Prime Minister Narendra Modi. The world was taken aback with the pandemic and was struggling to cope up with it when our PM declared the grand vision of a self-reliant India, the AatmaNirbhar Bharat. As the Union Minister of Mines and Coal, Pralhad Joshi often revealed ahead his ministry’s contribution to this grand initiative. They were collecting daily reports down to each district and having detailed deliberations with none other than the Prime Minister himself.

Consequently, when during the launch of auction for commercial mining of coal, on June 18, 2020, PM Modi discussed about ending decades of lockdown in coal, the segment was only too ready to don the novel avatar. In the following months, the government galvanised its machinery to remodel the mineral mining sector.

The mining sector is next only to agriculture in terms of creating employment. The sector directly and indirectly employs about 1.1 crore people and sustains the livelihood of about 5.5 crore people in the country. One direct job in the sector generates 10 indirect jobs. Likewise, 1% growth in mining results in a 1.5% growth in industrial production. Its importance grows manifold when we consider other allied sectors that depend on it for their survival and existence. Sectors such as steel, aluminium, commercial vehicles, rail transportation, ports, shipping, power generation, etc, are closely linked to the mining sector. Therefore, an enhancement to the mining sector will boost these sectors as well, which, together, will brighten the economic horizon of the nation.

With a sector having such far-reaching significance in generation of employment opportunities, the Modi government visions increasing its contribution from 1.75% of GDP lately to 2.5% of GDP, with a target to increase the mineral production output by 200% in the next seven years.

The country’s mineral mining sector has remained choked for various decades under previous regimes. Despite huge mineral potential, India had so far been underexplored with mining being carried out only on 0.25% of the land, whereas over 17% of the national land has mineral reserves. The segment had also underperformed in attracting investments.

While mineral production stands at Rs 1.25 lakh crore annually, its import is a whopping Rs 2.5 lakh crore.

Unless one is an ostrich with the head buried under the sand, it does not take much to gauge the herculean task the country has achieved in the last 10 months to give a new direction to economic growth. Mineral mining is one such sector that has witnessed an array of reforms, with the Mines and Minerals (Development and Regulation) Amendment Act, 2021, being the latest addition to the fore. These reforms will give new ‘LIFE’ to the mining sector, where ‘L’ stands for Long-term impact, ‘I’ for Immediate boost to mineral production, ‘F’ for Focus on public welfare, and ‘E’ for Ease of Doing Business.

They have seen how a large number of mining blocks with very high quality of resources were not brought into production for many years, resulting in suboptimal consumption of valuable national mineral resources. Most of them have been blocked in legacy cases. Legacy issues pertaining to mining have become an impediment as such cases can neither be granted lease because the time period to grant them is already over, nor can they be brought to auction because of legal impasse. We have amended the existing provision for reallocation of such mineral blocks through a transparent auction mechanism.

Similarly, auctioned mines not made operational within three years will be returned to the concerned states for reallocation through auction and Greenfield mines allocated to PSUs that are not brought into production are also proposed to be reviewed and given back to state governments for auction. Bringing unused mineral blocks into production will generate enormous employment opportunities and bring growth to such mining areas.

One of the important reforms is transferring all valid rights, approvals, clearances and licences to the new lessee, valid until the mineral reserves last. This would facilitate lessees transfer mine to another entity, thus bringing fresh investment and entrepreneurship to operate the mine.

This amendment Act is set to redefine the standard of exploration required for auctioning of partially explored mineral blocks for prospecting licence-cum-mining lease. This will boost seamless transition from exploration to production and encourage participation of private players. The amended provisions in the Act also ensure better clarity on ‘mining without lawful authority’ to save leaseholders from unjustified penalties under other litigations.

They are fulfilling a long-standing demand by making local Members of Parliament a member of the District Mineral Foundation (DMF) Governing Council to make the DMF more outcome-oriented. Arrangements have been made to keep a check on misuse of DMF funds so that inclusive development of those affected by mining can be ensured.

There are several other changes in the MMDR Act that will boost ease of doing business in the mineral mining sector and make it more competitive and productive. The MMDR Amendment Act, 2021, will pave the way for creation of almost 55 lakh employment opportunities along with having a multiplier effect on several other sectors. PM Modi has ensured that the mineral mining sector gets to play its authentic role of being the foundation of the nation’s economy. Over several meetings he has laid out an envisioned plan wherein the segment is taking allied industries on a growth course to India becoming a $5-trillion economy. Pralhad Joshi said, “I am happy that these amendments are in line with his vision and I am confident that the sector has a major role to play in defining ourselves as a ‘new India’”.