AN ANALYSIS OF THE MINING LAWS IN INDIA
Introduction
Natural resources have a crucial role in the economic development of a nation. These resources are important especially for a developing country like India which has a cultural history of contributing most to its economy through mining.[1] Mining regulations need to be taken care of to use the mineral resources efficiently and prevent their exploitation.
Legal and Regulatory Framework
The primary legislation for regulating the mining industry in India is the Mines and Minerals (Development and Regulations) Act, 1957. The act has been passed by the legislature in pursuance to Entry No. 54 of List I of the Seventh Schedule[2] as Central Act (No.67 of 1957). Under the act, mineral resources are divided into two categories, minerals and minor minerals.
As per section 3(aa) and 3(b) of the Act, ‘minerals’ or ‘major minerals’ exclude mineral oils such as natural gas and petroleum. ‘Minor minerals’ are listed in section 3(e) of the act such as building stones, gravel etc. and shall include any minerals declared by the Central Government as minor minerals by way of notification, from time to time.
As per section 2 of the MMDR Act and by virtue of being a central legislation, the powers to govern and regulate the mining sector are with the Central Government. These include controlling the regulation of mines and development of minerals within the powers given by the act.[3] On the other hand, State governments have complete powers to regulate the operations of minor minerals and grant leases and concessions in respect of the same minerals. These powers are conferred on the State Government by section 15 of the MMDR Act.
In accordance with Article 297 of the Constitution, powers over minerals and other resources underlying the ocean within territorial waters, continental shelf or the exclusive economic zone shall lie with the Central Government. Section 13A of the MMDR Act authorises the Central Government to make rules for grant of prospecting licenses or mining leases in respect of the aforementioned mineral resources.
PERMITS, LICENSES AND LEASES
As per the act, reconnaissance, prospecting or mining operations shall take place anywhere only in accordance with the terms and conditions of a reconnaissance permit or a prospecting license or a mining lease.[4] Where prospecting licenses are granted for the purpose of undertaking any operations for exploring, locating or proving mineral deposit, mining leases are granted for undertaking any operations for winning any mineral. On the other hand, reconnaissance permits are granted merely for preliminary prospecting of a mineral through surveys and mapping.
In respect of coal and ignite, a permit, license or lease is granted for any area containing the said minerals by the Central Government in accordance with the procedure laid down in section 11 of the MMDR Act. Although for atomic minerals, the Central Government merely has the power to make rules for regulating the grant of license or lease or any mineral concessions but the same can be granted only by the State Governments in accordance with rules framed by the former.[5]
DISTRICT MINERAL FOUNDATION
Section 9B was added to the MMDR Act by way of an amendment in 2015. The said section requires establishment of a trust by the State Government called District Mineral Foundation in any district affected by mining related operations. This trust is to be a non-profit body. The objective of the foundation is to work for the interest and benefit of people affected by mining operations or any related activity. Holders of mining lease or a prospecting license-cum-mining lease are to pay to the DMF of the district an amount in proportion to the royalty (not exceeding one-third) prescribed by the Central Government. This payment is in addition to the royalty paid by the license or lease holder u/s. 9.
NATIONAL MINERAL EXPLORATION TRUST
In addition to the DMF, the 2015 amendment to the Act mandated establishment of another trust called National Mineral Exploration Trust by the Central Government. This trust is also supposed to be a non-profit body. The purpose of its establishment is to use the funds accrued to the trust for regional and detailed exploration in a manner which is prescribed by the Central Government. Holder of a mining lease or a license-cum-lease has to pay two percent of the royalty to the Trust.
SPECIAL COURTS
Another amendment made to the MMDR Act in 2015 required Constitution of Special Courts u/s. 30B. The object of constituting these courts is to provide speedy trial for offences for contravention of provisions pertaining to licensing and lease requirement u/s. 4 of the Act. Judges of special courts are appointed by the State Governments in concurrence of the High Court. An appeal can be made to the High Court against an order of a Special Court by the aggrieved party within a period of sixty days from the order of the Special Court.
Special Courts are deemed to be a Court of Session and have powers of the same u/s. 30C and accordingly the Code of Criminal Proceedings would apply to any proceedings before the same court.
Mineral Conservation and Development Rules, 2017
These rules were enacted in exercise of powers u/s. 18 of the MMDR Act of 1957. Chapter VI, Section 18 of the MMDR Act confers upon the Central Government the duty to conserve and systematically develop minerals in India and protect the environment by taking necessary steps against pollution caused by mining related operations.
The rules, therefore, lay down the procedure necessary for the above-mentioned cause by providing for matters listed u/s. 18(2) of the Act such as opening of new mines, regulation of mining operations, collection and excavation of minerals, measures for beneficiation of ores, development of mineral resources etc.[6]
The Mineral (Auction) Rules, 2015 &
Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016
These rules were introduced in exercise of the powers of the Central Government u/s. 13 of the MMDR Act to introduce any rules for regulating the grant of permits, licenses and leases in respect of minerals and for related purposes. As per section 3 of both of the above rules, they are applicable to all minerals except those notified as minor minerals and those listed in Parts A and B of the First Schedule to the MMDR Act.
Offshore Areas Mineral (Development and Regulation) Act, 2002
This Act was enacted by the Central Government to provide for regulation of mines and development of mineral resources in the offshore areas such territorial waters, continental shelf, the exclusive economic zone and any other maritime zone under the sovereignty of India.[7] It applies to all minerals found in offshore areas including those prescribed by Section 2 of the Atomic Energy Act, 1962 but excludes mineral oils (natural gas and petroleum) and related hydrocarbon resources.[8]
Offshore Areas Mineral Concession Rules, 2006
These rules were introduced by the Ministry of Mines in accordance with and in exercise of powers conferred by section 35 of the Offshore Areas Minerals Act to lay down the procedure for granting of reconnaissance permit, exploration license or production lease as per the said act. The rules also lay down conditions to grant any operating rights under section 6 of the above-mentioned act.
Indian Bureau of Mines (IBM)
The Indian Bureau of Mines (IBM) established in 1948, is a subordinate office under the Department of Mines, Ministry of Mines.[9] ‘It is a multi-disciplinary government organisation engaged in promotion of conservation, scientific development of mineral resources and protection of environment in mines other than coal, petroleum and natural gas, atomic minerals and minor minerals.’ [10]
Objective of IBM is to promote systematic and scientific development of onshore and offshore mineral resources in India. This is practiced through regular inspection of mines, checks on mining plans and environmental management plans to minimise the adverse impact of mining operations on the environment.[11]
The Mines Act, 1952
The Preamble of this act says ‘an act to amend and consolidate the law relating to the regulation of labour and safety in mines.’ Therefore, the act is a welfare legislation which aims to provide regulation of labour and their safety in mines.[12] This can be done by framing and amending laws for betterment of the workmen. It lays down provision for healthcare and security of mineworkers and providing them with suitable working conditions.
The Mines Rules, 1955
These rules were introduced in exercise of powers conferred by section 58 of the Mines Act of 1952 for the purposes mentioned in the said provision. Similar to the act, the rules provide for provisions pertaining to basic healthcare, sanitation and welfare of mine-workers.[13]
RECENT DEVELOPMENTS
Parliament passed The Mineral Laws (Amendment) Bill, 2020 which provides for amendments in the MMDR Act of 1957 and The Coal Mines (Special Provisions) Act, 2015. The amendment is expected to give rise to a new era in the Indian coal and mining business, especially to promote Ease of Doing Business.[14]
While introducing the Bill, Pralhad Joshi, Minister of Parliamentary Affairs, Coal and Mines said: “The Bill will pave the way to offer coal blocks for mining through prospecting license-cum-mining lease, thus promoting foreign direct investment in the sector... Doing away with restrictions of end use will also help in boosting Ease of Doing Business.”[15]
The Mineral Laws (Amendment) Bill, 2020 provides for the following:s
1. Removal of restriction on end-use of coal: Companies to be allowed to carry on mining operations for own consumption, sale or any other purposes.
2. Eligibility of auction for coal and ignite blocks: Companies need not possess prior coal mining experience in India or elsewhere to participate in auction. This facilitates implementation of FDI policy in the coal sector.
3. Composite licensing for prospecting and mining: A composite license for prospecting and mining activities.
4. Statutory clearances to be transferred to new bidders: Various clearances, licenses and approvals of previous lessee to be extended to new bidder for two years.
5. Reallocation after termination of the allocations
6. Advance action for auction of mining leases for specified minerals.[16]
Another development in domain of Mining laws is the Government abandoning its plan to amend the Offshore Areas Mineral (Development and Regulation) Act, 2002 to pave way for allocation of offshore mining leases through auction to the private sector. Instead, they shall be reserved for the public sector.[17]
[1] Mariya Paliwala, ‘The Mines Act, 1952: A Comprehensive Analysis’ (iPleaders, 9 December 2019) https://blog.ipleaders.in/the-mines-act-1952-a-comprehensive-analysis.html accessed 9 May, 2020.
[2] The Constitution of India, Seventh Schedule (Article 246).
[3] Mines and Minerals (Development and Regulations) Act, 1957, s. 2.
[4] Mines and Minerals (Development and Regulations) Act, 1957, s. 4(1).
[5] Mines and Minerals (Development and Regulations) Act, 1957, s. 11B.
[6] Mines and Minerals (Development and Regulations) Act, 1957, s. 18(2).
[7] Offshore Areas Minerals (Development & Regulation) Act, 2002, s. 2.
[8] Ibid.
[9] ‘Indian Bureau of Mines (IBM)’, (Ministry of Mines) https://mines.gov.in/writereaddata/UploadFile/chap9.pdf accessed 8 May, 2020.
[10] Ibid.
[11] Anubhav Pandey, ‘Regulatory and Legal Framework Governing Mines and Minerals in India’ (iPleaders, 23 September, 2017) https://blog.ipleaders.in/mines-and-minerals-laws.html accessed 8 May, 2020.
[12] Mariya Paliwala, ‘The Mines Act, 1952: A Comprehensive Analysis’ (iPleaders, 9 December 2019) https://blog.ipleaders.in/the-mines-act-1952-a-comprehensive-analysis.html accessed 9 May, 2020.
[13] Ibid.
[14] ‘Parliament Passes The Mineral Laws (Amendment) Bill, 2020’ (Press Information Bureau, Government of India, Ministry of Coal; 12 March 2020) https://pib.gov.in/newsite/PrintRelease.aspx?relid=200123 accessed 9 May 2020.
[15] ‘Mineral Laws (Amendment) Bill introduced in Lok Sabha’ (Hindu Business Line, 2 March 2020) https://www.thehindubusinessline.com/economy/mineral-laws-amendment-bill-introduced-in-lok-sabha/article30964384.ece accessed 8 May 2020.
[16] ‘What is The Mineral Laws (Amendment) Bill, 2020?’ (India Today, 28 March 2020) https://www.indiatoday.in/education-today/gk-current-affairs/story/what-is-the-mineral-laws-amendment-bill-2020-divd-1660633-2020-03-28 accessed 9 May 2020.
[17] Surya Sarathi Ray, ‘Reserved for PSUs: Govt. abandons plan to open offshore mining to private players’ (Financial Express, 4 August 2019) https://www.financialexpress.com/economy/govt-reserves-offshore-mining-for-public-sector-only/1665394/ accessed 10 May 2020.