Parliament Passes Mines and Minerals (Development & Regulation) Amendment Bill, 2023
Major Reforms Introduced in Mining Sector with Focus on Critical Minerals
TFP Bureau New Delhi, August 3, 2023 – The Rajya Sabha has successfully passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023 on Wednesday, ushering in a new era of reforms in the mineral sector. The Bill, which was earlier passed by the Lok Sabha on July 28, 2023, is now awaiting the President’s assent, and it is expected to bring about significant changes in the exploration and mining of critical minerals in the country.
The Mines and Minerals (Development and Regulation) Act, 1957, underwent comprehensive amendments in 2015 to introduce transparency in the allocation of mineral resources through auctions. Subsequent amendments in 2016, 2020, and 2021 addressed emergent issues and further reformed the sector. However, the mineral sector required additional reforms to boost the exploration and mining of critical minerals essential for economic development and national security.
The world-wide focus on critical minerals has led to the introduction of major reforms in the mining sector through this amendment. Notable changes include the omission of six minerals from the list of 12 atomic minerals specified in Part-B of the First Schedule of the Act. The minerals removed from this list are lithium-bearing minerals, titanium-bearing minerals and ores, beryl and other beryllium-bearing minerals, niobium, tantalum-bearing minerals, and zirconium-bearing minerals.
These critical minerals, which find applications in space industries, electronics, communications, energy, and electric batteries, have gained significance due to India’s commitment towards energy transition and achieving net-zero emissions by 2070. Their exploration and mining have been limited as they were exclusively reserved for Public Sector Undertakings (PSUs). By opening these minerals to private sector exploration and mining, their availability is expected to increase significantly, thereby reducing import dependence and supply chain vulnerabilities.
Another crucial reform introduced by the amendment empowers the Central Government to exclusively auction mining leases and composite licenses for certain critical minerals, including molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, platinum group of elements, minerals of the “rare earth” group (not containing Uranium and Thorium), and fertilizer minerals such as potash, glauconite, and phosphate (without uranium). This move aims to accelerate the auction process and expedite the production of these minerals, which are essential for various emerging technologies such as space, electronics, information technology, energy transition, and food security.
While the auction would be conducted by the Central Government, the grant of mining leases or composite licenses to the successful bidders will be carried out by the respective State Governments. This arrangement ensures that the auction premium and other statutory payments will continue to be received by the State Governments, contributing to their revenue.
To attract Foreign Direct Investment (FDI) and engage junior mining companies in exploration activities, the amendment introduces the concept of an Exploration License (EL). This license will allow the licensee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals, including copper, gold, silver, diamond, lithium, cobalt, molybdenum, lead, zinc, cadmium, elements of the rare earth group, graphite, vanadium, nickel, tin, tellurium, selenium, indium, rock phosphate, apatite, potash, rhenium, tungsten, platinum group of elements, and other minerals proposed to be removed from the list of atomic minerals.
The Exploration License will be granted through auction, and the preferred bidder will be selected through reverse bidding for a share in the auction premium payable by the mining lease holder. By encouraging private sector participation in mineral exploration, the amendment aims to leverage advanced technology, finance, and expertise for the discovery of mineral deposits, especially for deep-seated and critical minerals.
Deep-seated minerals, such as gold, silver, copper, zinc, lead, nickel, cobalt, platinum group of minerals, diamonds, etc., are of high value and critical for various sectors, including clean energy, infrastructure, and defense. The proposed exploration license regime seeks to incentivize private sector participation in exploring these minerals, reducing import dependence, and accelerating their production for economic growth and national security.
The passage of the Mines and Minerals (Development and Regulation) Amendment Bill, 2023, is expected to provide a conducive legal environment for attracting FDI and junior mining companies, fostering innovation and technology in exploration and mining operations. This reform aligns with India’s commitment to meet the growing demands for critical minerals and achieve its goals of energy transition and sustainable development.
