Cabinet approves mining sector reform proposals

The Union Cabinet considered and approved the mining sector reform proposals at its meeting today.

First, as opposed to separate licenses for exploration and then for production, this added to considerable uncertainty. Looking at this, a comprehensive license was proposed to be given.

The second important proposal was to do away with the distinction between captive and non-captive mining. That is positive for firms with captive mines as they can now sell their output in the open market, and this will boost revenues as well as augment supplies in the country; this also means that the old policy of giving preference to ‘captive’ users will go and, instead, all mines will be available for anyone, including commercial miners.

Finance minister Sitharaman had announced a series of reform proposals for the mining sector. She had also announced the concept of joint auctioning of bauxite and coal mines for the aluminium sector.

Among the proposals, another important one was on amending the contentious provisions of 10A(2)(b) and 10A (2)(c) to pave the way for auctioning of around 500 potential leases blocked in legacy issues now.

Section 10A(2)(b) deals with leases where reconnaissance permit or prospecting licence were granted; while 10A(2)(c) relates to grant of mining leases (ML). The mines ministry has sought comments from the stakeholders on these proposals till September 3.

“These (blocks) can neither be granted because the time period to grant them was already over nor could they have beeen brought to auction because of legal impasse. These cases that come under Section 10A (2)(c) of the Act which stood extinguished in January 12, 2017 as per the law, but are still litigated or pursued unnecessarily at various level need to be brought to a closure to end the policy stalemate,” mines ministry had earlier said in the reforms proposals seeking stakeholders’ suggestion.

There was also a proposal to develop a comprehensive and broad-based mineral index for determination of levies and taxes on the lines of recently launched National Coal Index. It has been decided that a committee would be set up to develop the National Mineral Index in which representatives of the state government will also be inducted. The National Mineral Index will determine the value of the mineral that will form the basis for calculation of royalty and other such levies of selected minerals.

The Mines ministry had also proposed to seek amendment the relevant provision of the Act and rules to make National Mineral Exploration Trust functioning fully as an autonomous body. It also sought to amend rules to clarify the definition of illegal mining. At present, there is no distinction between illegal mining done outside the leasehold area and mining done in violation of various clearances and approvals inside a mining lease area.