India's Bureaucracy Pushing More Mining Regulation

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TC Malhotra contributes to MetalMiner from New Delhi.

The Indian federal government has approved a new bill aimed at regulating mining activities. The bill proposes a profit-sharing system and bidding of mining rights. The bill is likely to be tabled in Parliament in the winter session. According to a report published in Business Standard, the new mining bill also looks to usher in a regime of royalty concessions for the first time in the country’s history, besides profit-sharing with tribal people and auctioning of mineral concessions.

The bill will mandate coal companies to provide 26 percent of post-tax profit for the welfare of affected people, a move intended to benefit mostly tribals. According to the Business Standard report, Section 41 of the Mines and Minerals Development and Regulation (MMDR) Bill, which deals extensively with royalty rates, states: “Concessional rates of royalty may be specified for cases where the (mining) lessee beneficiates the mineral at the ore stage.

The report claims that the idea of royalty concessions was floated by the ministerial group and was developed during later discussions by Mining Secretary S. Vijay Kumar.

The Mines & Minerals (Regulation and Development) Bill, 2011, which seeks to replace a 1957 act, also provides for setting up of National Mining Regulatory Authority and Tribunal and formation of District Mineral Foundations in 60 mineral-rich districts across the country. The states will also be advised to set up authorities and tribunals on these lines.

The bill, advocating “sustainable and scientific” mining, also suggests that non-coal miners such as bauxite and iron ore firms share an amount equal to that of royalty with local residents instead of just sharing profits. Simply, the bill proposes that coal companies set aside 25 percent of their post-tax profits into a fund. In addition, an amount equal to the royalty for iron ore, bauxite and limestone will also flow into the fund.

The total amount is proposed to be spent across 60 tribal-dominated districts in Jharkhand, Chhattisgarh, Orissa, Madhya Pradesh and Karnataka, with each district getting Rs 1.80 billion ($37.5 million) on average every year. Of the 60 districts, 24 are badly scarred by Naxal violence.

A 10-member ministerial panel set up in June last year has finalized the methodology ensuring that people in mineral-rich districts of Andhra Pradesh, Orissa, Chhattisgarh, Goa, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, Uttar Pradesh and West Bengal get monetary benefits from mining.

If the bill is passed, an estimated amount of Rs 100 billion ($2.08 billion) per year will be generated from miners. Once the law is approved, district-level mining foundations will be set up, according to the proposals.

Lawmakers also propose changing the mechanism for fixing the royalty for minerals in the new dispensation as the government intends to set up another regulatory agency the National Mining Regulatory Development Authority — for the purpose.

–TC Malhotra

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