Understanding The Mineral Law (Amendment) Bill, 2020 and Its Norms

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The Mineral Laws (Amendment) Bill, 2020 was introduced in Lok Sabha on March 2, 2020. The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act). An Ordinance with similar provisions was promulgated on January 10, 2020. The Bill replaces the ordinance for amendment of the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) and the Coal Mines (Special Provisions) Act, 2015 (CMSP Act) which was promulgated on 11th January 2020.

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The Bill is expected to open a new era in Indian coal & mining sector especially to promote Ease of Doing Business. Let’s see some of the key highlights of the amendment;

Removal of restriction on end-use of coal: The Bill removes this restriction on the use of coal mined by such companies. And thus companies will be allowed to carry on coal mining operation for own consumption, sale or for any other purposes, as may be specified by the central government.

Eligibility for auction of coal and lignite blocks: The Bill clarifies that the companies need not possess any prior coal mining experience in India in order to participate in the auction of coal and lignite blocks. Further, the competitive bidding process for auction of coal and lignite blocks will not apply to mines considered for allotment to a government company or its joint venture for own consumption, sale or any other specified purpose; and a company that has been awarded a power project on the basis of a competitive bid for tariff.

Composite license for prospecting and mining: The Bill adds a new type of license, called prospecting license-cum-mining lease. It will be a composite license providing for both prospecting and mining activities. Currently, separate licenses are provided for prospecting and mining of coal and lignite, called prospecting license, and mining lease, respectively. Prospecting includes exploring, locating, or finding mineral deposit.

Non-exclusive reconnaissance permit holders to get other licenses: The Bill provides that the holders of such permits may apply for a prospecting license-cum-mining lease or mining lease. This will apply to certain licensees as prescribed in the Bill.

Transfer of statutory clearances to new bidders: The Bill provides that the various approvals, licenses, and clearances given to the previous lessee will be extended to the successful bidder for two years. During this period, the new lessee will be allowed to continue mining operations. However, the new lessee must obtain all the required clearances within these two years. Currently, upon expiry, mining leases for specified minerals (minerals other than coal, lignite, and atomic minerals) can be transferred to new persons through auction. This new lessee is required to obtain statutory clearances before starting mining operations.

Prior approval from the central government: Under the MMDR Act, state governments require prior approval of the central government for granting reconnaissance permit, prospecting license, or mining lease for coal and lignite. The Bill provides that prior approval of the central government will not be required in granting these licenses for coal and lignite, in certain cases.

Advance action for auction: Under the MMDR Act, mining leases for specified minerals (minerals other than coal, lignite, and atomic minerals) are auctioned on the expiry of the lease period. The Bill provides that state governments can take advance action for auction of a mining lease before its expiry.

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