Or­di­nance to re­form the min­ing sec­tor will do more harm than good


SPres­i­dent Pranab OON AF­TER Mukher­jee signed the or­di­nance to amend the ar­chaic Mines and Min­er­als (Devel­op­ment and Reg­u­la­tion) Act of 1957,Union min­is­ter for steel and mines, Naren­dra Singh To­mar, an­nounced it is a rev­o­lu­tion­ary step to­wards re­viv­ing the coun­try’s min­ing sec­tor.

His min­istry high­lighted that the Mines and Min­er­als (Devel­op­ment and Reg­u­la­tion) Amend­ment Or­di­nance, 2015 will ad­dress prob­lems that have been plagu­ing the sec­tor for long.Th­ese in­clude grant­ing min­eral leases in dis­cre­tionary, non­trans­par­ent and de­layed ways, prob­lems in re­newal of min­ing leases, il­le­gal min­ing ac­tiv­i­ties, re­luc­tance to un­der­take ex­plo­ration and in­vest­ment in the sec­tor, and griev­ance of the civil so­ci­ety that the min­ing-af­fected peo­ple are not cared for.

But th­ese prob­lems are not new and ways to ad­dress most of them have long been de­bated by the coun­try’s in­tel­li­gentsia.This in­cludes the re­port of the High Level Com­mit­tee on Na­tional Min­eral Pol­icy in 2006 by the Plan­ning Com­mis­sion.In 2011,the then gov­ern­ment led by the United Pro­gres­sive Al­liance (upa) in­tro­duced a bill to re­form mmdr Act,1957 which later lapsed.

So, what was the ur­gency be­hind in­tro­duc­ing an or­di­nance? Is it to re­form the sec­tor, as high­lighted by the mines min­istry, or to give an im­pe­tus to the min­ing sec­tor, by ex­pe­dit­ing and ex­pand­ing min­ing leases?The min­istry has sev­eral times ac­knowl­edged that de­lays in grant­ing min­ing leases has been a ma­jor fac­tor for “sig­nif­i­cant re­duc­tion in the out­put of the min­ing sec­tor”.Sources say the Prime Min­is­ter’s Of­fice has al­ready an­nounced a dead­line of March 10 to begin the first phase of auc­tion­ing of non-coal mines.

Auc­tion is the buzz­word

The or­di­nance in­tro­duces a pro­vi­sion to grant all min­eral con­ces­sions through auc­tion­ing. How­ever, auc­tion­ing is hardly a one-siz­e­fits-all so­lu­tion.

It is the best way to al­lo­cate min­eral con­ces­sions where min­eral de­posits can be ac­cu­rately es­tab­lished and a proper val­u­a­tion can be done. This will help the lease­holder cap­ture the wind­fall prof­its as well as bring in trans­parency in the al­lo­ca­tion process. How­ever,in cases where min­eral de­posits are not prop­erly es­tab­lished,auc­tion­ing can lead to prob­lems like un­der­val­u­a­tion of min­er­als, lead­ing to lower rev­enue gen­er­a­tion for the gov­ern­ment, or over­val­u­a­tion, re­sult­ing in the in­abil­ity of the con­ces­sion holder to meet com­mit­ments. This will lead to un­cer­tain­ties in case of prospect­ing-cum­min­ing leases.

If auc­tion­ing has to be done for prospect­ing-cum-min­ing leases, it can only be done for bulk min­er­als, such as iron ore,

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