Govt approves ordinance for mines allocation

The government on Monday approved amendments to the near six-decade-old mining and minerals development and regulation (MMDR) act through the ordinance route, paving the way for auction of minerals such as iron ore, bauxite and limestone.

The auction route first introduced in coal mining does away with the traditional method of granting mineral licences on a case-to-case basis. While it maximises the revenue potential and is believed to be more transparent, the industry has been opposed to it since it is not a global practice.

To fast-track over 60,000 pending applications with state governments, the ordinance also expanded the area for mineral leases from 10 sq kilometres to 100 sq kilometres to facilitate large-scale mining. Further, mines would be auctioned for 50 years with no further clause for renewal. They would be re-auctioned after 50 years.

The ordinance, however, introduces some contentious clauses in the Act that sets different rules for public and private sector mining companies and between captive and non-captive mining firms, moves that are likely to act as stumbling blocks in the reform process. For existing mining leases for example, the moratorium for captive mining firms is 15 years while for non-captive firms it is 5 years.

While iron ore, limestone and bauxite are predominantly mined to feed industries such as iron and steel, cement and aluminium respectively, rest of the 80 minerals regulated under the Act are mined independently.

"The ordinance differentiates between public and private companies or between captive and non-captive mining," said RK Sharma, secretary general, Federation of Indian Mineral Industries.