The Centre will now decided on rules for auctioning and it is along the lines of coal auction. The states will perform the auction and will also get the revenue out of these auctions.
The Union Cabinet has approved changes to the Mines and Minerals Development and Regulation (MMDR) Act. The proposed changes were to make auction the preferred mode to sell important minerals.
There are 60,000 mining applications pending with states. The Centre will now get some discretionary powers over states.
The Centre will now decide on rules for auctioning and it is along the lines of coal auction. The states will perform the auction and will also get the revenue out of these auctions. The Centre will ensure that these timelines are met and it will also have the power to intervene if states do not meet the order as per the timelines.
The onus will be on states to expedite these mining leases. It will be beneficial for the states and Centre will retain its power to monitor it and ensure that these timelines are met for mining.
With this, the government has paved the way for leases to be easily transferable. These transferable leases are expected attract private investments and foreign direct investment.
It was also proposed that prospecting licence along with mining leases will be auctioned.
A district mineral fund is also likely to be created though the quantum is not known. However, sources say that district mineral fund will be created on one third or 30 percent of royalty.
The government intends to bring in transparency and wants to continue mining in the country. There are a lot of pending cases and for the past 4-5 years, iron ore sector has been facing crunch in terms of mining. The lease will last for 50 years and there will be no deemed extension or renewal. Any renewal case which is pending will get 15 years of moratorium for captive users and 5 years for non-captive users though PSUs which have these mines would not be affected.
In short the government is looking at transparency and wants to restart the mining sector as “Make in India” is the target of this government and manufacturing is dependent on raw materials. However, the question is that these minerals are not auctioned yet. So, if auctioned these are direct raw materials and the basis for auctioning will be questioned and also the end product in terms of consumer how it will come out.
RK Sharma of FIMI is completely against the auction route for mines. Also, he says that excluding the public sector from auction purview is discriminatory and there should be uniform rules for private and public sector. He adds that none of the existing issues of the mining industry have been addressed.
While GD Mundra of Sarda Energy says intervention by the Centre is a welcome move as so far all the mineral mines are governed or owned by state governments. Now the Centre will ensure that all timelines are met and this in turn will ensure that all investments start giving returns.