Legal Analysis of New changes introduced by Amendment to MMDR Act, 1957

1. MINES AND MINERAL
AMENDMENT ACT, 2015
Legal Analysis of Principal Changes & Likely Impacts

2. Statutory Development
Mines and Minerals (Development and Regulation) Amendment
Ordinance, 2015 (“Ordinance”) was promulgated on January 12,
2015. Bill was introduced in Lok Sabha on February 24, 2015 and
finally passed by passed by both the houses on 26.03.2015.
The said Act amended the Mines and Minerals (Development and
Regulation) Act, 1957 (“Act”).
By way of this Ordinance the Central Government has made significant
changes to the Mines and Mineral (Development and Regulation) Act,
1957
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3. OBJECTIVES
A. Improved transparency in allocation of mineral resources
B. Obtaining government’s fair share of value of such resource.
C. Attracting private investment and latest technology
D. Eliminating delay in administration to enable expeditious
development of mineral resource.
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4. New Schedule - IV
A separate schedule- IV is carved out and Iron ore along with
Bauxite, limestone and Manganese ore are shifted to it.
Earlier all major minerals were placed in Schedule I. The central
government may by notification can amend IV Schedule.[Refer-
Section 2 (i) (ea)]
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5. Previous Approval : Dispensed
Earlier in respect of ten minerals finding its place in Part C of First Schedule (like
iron ore, manganese etc .), State Government needed to obtain the prior approval of
the Central Government before grant of mineral concession.
The present Amendment removes the need for such “prior approval” from the
Central Government for minerals stated anywhere except in Part A & B of First
Schedule. So as on date Part C Minerals and Schedule IV mineral do not require prior
approval from CG.
All powers towards grant of Mineral concession given to State Government for said
category of minerals.[Proviso to Section 5 (1) ]
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6. Long Term Leases : 50 years
 New Mining Leases shall be granted for a period of 50 year and upon the expiry
of lease period the mining leases shall be put to auction. [ Section 8A]
 Earlier ML for a maximum of 30 and minimum for 20 years and could be renewed
for a period not exceeding 20 years. Under the amendment, the lease period for
coal and lignite remains unchanged i.e. Part A mineral and for other minerals ML
shall be granted for a period of 50 years. All mining leases granted for such
minerals before the Act, shall be valid for 50 years. On expiry of the lease, instead
of being renewed, the leases shall be put up for auction, as specified in the
Act.[Section 8A (2) and (3)]
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7. Auction of Leases &
Automatic Extension: Big Fillip
 Upon expiry of lease period of minerals finding place in Part C and Schedule IV
shall be put up for auction. This section does not touch Part A minerals for which
separate Coal Mines (Special Provisions)Act, 2015 has been brought in and
auction of coal mines under that Act shall continue to take place. [Section 8A (4)]
 Any lease granted before the commencement of the Ordinance, shall be
extended: (i) up to March 31, 2030 for minerals used for captive purpose (specific
end-use) and up to March 31, 2020 for minerals used for other than captive
purpose, or (ii) till the completion of renewal period, or (iii) for a period of 50 years
from the date of grant of such lease, whichever is later. This provision shall not
apply to mining leases for which renewal has been rejected, granted, or
lapsed. Companies with mining leases more than 50 years old can operate till
2020, which goes up to 2030 if the leases were granted for captive use. [Section
8A (5) &(6)]
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8. ROFR: Advantage Lease Holder
Right of First Refusal shall be accorded to holder of the lease for captive purposes
when the said mine comes up for auction [Section 8A (7)]
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9. DM Foundation & National Trust
District Mineral Foundation and National Mineral Exploration Trust set up
wherein Licensee and lease holders (PL cum ML holder and ML holders) shall be
paying an amount not exceeding more than 1/3 of Royalty (as prescribed by Central
Government) to the Foundation and 2% of Royalty Trust. [Section 9 B & 9C ]
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10. Pending Application-Lapsed:
Rights RP/PL holder-Preserved
 All the application received prior to date of commencement of ordinance for
prospecting/ mining leases pending shall become ineligible. [Section 10A]
 The ineligibility shall not strike upon application received under Section 11A
(these are application in relation to Coal and lignite) and also where either RP/PL
have been granted (it should be Grant completed and not in any stage eg. State
has recommended for PL and it is pending with Centre for prior approval; similarly
it can’t be that though PL has been approved by the centre yet State has not
executed the Lease). The RP/PL holder shall have the right to obtain PL followed
by ML or ML. [Section 10A]
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11. Previous Approval Accorded: ML
Mandatorily to be Granted
Concessions related to Schedule I mineral will need to have previous approval of
Central Government. This also means that Schedule IV minerals won’t need to have
Central’s previous approval henceforth thereby dispensing off efforts to approach to
CG for Iron, Manganese, Limestone and Bauxite. It also in all likelihood means that
for these 4 minerals if an entity has PL, it can apply for ML for which previous
approval is not required and SG on its own can grant ML. [Section 10A]
The ineligibility will also not strike upon ML applicants wherein the stage is such that
CG has given its previous approval to the ML and the said mining lease need to be
granted within a period of 2 years. [Section 10A]
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12. Auction Process: Notified Minerals
 The Grant of concessions as per Section 10 shall not be applicable to cases under
Section 10A AND to minerals specified in Part A and B AND to cases covered by
Section 17A. It discusses auction process for mining leases and PL cum ML of
notified minerals only i.e. Schedule IV minerals [Section 10B]
 New category of mining license created i.e. the prospecting license-cum-mining
lease, which is a two stage-concession for the purpose of undertaking prospecting
operations ,followed by mining operations. A risky affair. Grant of Mining lease in
respect of notified mineral through auction: Where mineral content is not
established Prospecting cum Mining Lease to be granted by way of auction.
[Section 10 B (2)] [Refer Section 2 (ii) (ga) – defines “prospecting cum
mining lease”].
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13. No Preference – Time/Skill: Money
Becomes Most Important
Entire Section 11 has been deleted which dealt with the Preferential Rights and
substituted by Grant of PL cum ML for minerals other than notified mineral. The old
act provides in Section 11 which carried preferences to applicants on first cum first
serve basis and also basis their special strengths.
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14. Trading to Commence: Mineral
Concession Auctioned
Concept of trading of mineral concession (PL cum ML and ML per se) brought in
whereby trading of concession acquired through auction to be permitted and the
same shall be governed by prescribed procedure. Any transfer to any eligible person
is possible with the approval of the state government, and as specified by the central
government for cases covered under Section 10B (Notified) and Section 11(Non
Notified – Part C). If the state government does not convey its approval within 90
days of receiving the notice, the transfer shall be considered as approved. No
transfer shall take place if the state government communicates, in writing, that the
transferee is not eligible. Only mineral concessions granted through auction will be
allowed for transfer. [ Section 12 A]
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15. Joint Venture: Govt. Company to
take 74% Stake
Where Government company is desirous of carrying out prospecting operations or
mining operations in a JV. The JV partner shall be selected through a competitive
process and such Govt. Company shall hold more than 74 % of paid up share capital
in such JV. [Section 17A (2B)]
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16. Heavy Fines & Strict Action: Illegal
Mining
In order to bring a check on illegal mining, the penal provisions have been made
further stringent. Higher penalties and jail terms have been provided in the ordinance.
The punishment has been extended to a term of 5 years imprisonment from 2 years
and Fine has been increased to Rs. 5 Lakh/Ha from Rs 25,000. [Section 21]
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17. No More Delays: Time Bound
Disposal
Powers to Central Government to intervene even where State
Governments do not pass orders within prescribed time lines;
this will eliminate delay [Amended Section 30(b)].
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18. Special Courts: Expeditious
Disposal
A provision has been made for constitution of special court (deemed to be Court of
Session) by the state govt. for fast-track trial of cases related to illegal mining
wherein the judge qualified to be District and Sessions judge shall be appointed by
State Government with the concurrence of High Court. Any order passed by such
court can be challenged before the respective High Court within a time period of 60
days from the date of such order.[Section 30B]. [Refer Section 2 (iv) (hc) “Special
Court” means a Court of Sessions designated as Special Court under Section 30 B
(1)]
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19. Specific Provision :Mineral
Concessions - Auctions &
Otherwise
Disposal Section 10A Section 10B Section 11 Section 11A Selection 11B
Minerals RP/PL holders to
have right for
further
concessions.
Auction for ML
for Notified
Minerals
Schedule-IV
minerals.
PL cum ML for
Notified
Minerals.
Auction for PL
cum ML for Non
notified Minerals
(except
10A/17A/Part
A&B) – Part C
Minerals.
ML for notified
minerals.
Auction for
Coal/lignite
(Part A Mineral)
Concessions
As per CG
Rules and
States to
grant for
Atomic
minerals(P
art B
Mineral
Concessio
ns).
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20. THANK YOU
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