By - King Stubb & Kasiva on October 19, 2023
In a historic development aiming to strengthen India's mineral sector, both the Lok Sabha and the Rajya Sabha have successfully passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2023.[1] This landmark legislation, amending the Mines and Minerals (Development and Regulation) Act of 1957 (Principal Legislation), is poised to bring about substantial reforms in the mining industry, with a specific focus on critical minerals. This comprehensive article explores the vital provisions and potential implications of this groundbreaking legislation.
The Principal Legislation underwent several significant amendments in recent years, including in 2015, 2016, 2020, and 2021, to address various challenges within the mineral sector.[2] These amendments were affected to ensure transparency in resource allocation, promote the welfare of areas affected by mining, and facilitate exploration. However, it became evident that further reforms were necessary, particularly concerning critical minerals, which are of paramount importance for economic development and national security.
Critical minerals, encompassing elements such as lithium, graphite, cobalt, titanium, and rare earth elements, play a pivotal role in emerging technologies and the transition towards clean energy. These minerals are essential for applications in electric vehicles, renewable energy, electronics, and more. Recognizing the significance of these minerals, the Mines and Minerals (Development and Regulation) Amendment Bill, 2023, was introduced to further amend the existing act and usher in essential changes.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, introduces several pivotal amendments poised to reshape the mining sector:
One of the most noteworthy amendments involves the exclusion of six minerals from the list of 12 atomic minerals detailed in Part-B of the First Schedule of the Act.[3]
These include lithium-bearing minerals, titanium-bearing minerals and ores, beryl and other beryllium-bearing minerals, niobium and tantalum-bearing minerals, and zirconium-bearing minerals. Previously, these minerals were exclusively under the purview of public sector undertakings (PSUs) for mining and exploration. However, this amendment seeks to open up opportunities for private sector participation in exploring and mining these minerals.
This shift holds particular significance as these minerals find applications beyond atomic uses, extending to industries such as space technology, electronics, energy generation, and clean energy technologies. The demand for minerals like lithium, critical for lithium-ion batteries in electric vehicles, is expected to surge as the world transitions towards clean energy sources.
Reducing reliance on imports and promoting domestic exploration and mining of these critical minerals is a strategic move to ensure a dependable supply chain.
Another substantial change introduced by the bill is the empowerment of the Central Government to exclusively auction mineral concessions for critical minerals listed in Part D of the First Schedule of the Act.[4]
These critical minerals encompass molybdenum, rhenium, tungsten, cadmium, indium, gallium, graphite, vanadium, tellurium, selenium, nickel, cobalt, tin, platinum group elements, and certain minerals categorized under the "rare earth" group.
Although the auction process will be overseen by the Central Government, the granting of mining leases or composite licenses for these minerals will remain the responsibility of the State Government.
This amendment aims to expedite the auctioning process and accelerate the production of these minerals, which are indispensable for various high-tech industries such as space technology, electronics, information technology, and clean energy.
To encourage foreign direct investment (FDI) and attract junior mining companies to the sector, the bill introduces a novel mineral concession known as the Exploration License (EL).[5] This license permits the licensee to undertake reconnaissance and prospecting operations for critical and deep-seated minerals, as specified in the newly proposed Seventh Schedule to the Act.
The minerals covered under the Exploration License encompass 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 elements, and other minerals proposed to be removed from the list of atomic minerals.[6]
The allocation of exploration licenses will be conducted through reverse bidding, with the preferred bidder being the one quoting the lowest percentage bid. This approach is anticipated to create a favourable legal environment for attracting FDI and junior mining companies to invest in India.
These amendments are expected to significantly enhance the domestic production of critical minerals. By opening up the sector to private sector participation and streamlining the auction process, India can reduce its reliance on imports and ensure a stable supply of these vital resources.
The Amendment Bill, 2023, has far-reaching economic and technological implications. By fostering domestic production of critical minerals, India can reduce costs associated with imports, enhance its technological capabilities, and strengthen its position in high-tech industries such as space technology, electronics, and clean energy. These minerals are the building blocks of a sustainable and technologically advanced future.[7]
In conclusion, the approval of the Mines and Minerals (Development & Regulation) Amendment Bill, 2023, marks a momentous leap in the transformation of India's mineral sector. With a dedicated emphasis on critical minerals, the introduction of exploration licenses, and granting the Central Government authority to auction mineral concessions, India is poised to strengthen domestic production, diminish reliance on imports, and solidify its role as a prominent participant in the global mineral arena. These amendments are poised to beckon investments, foster exploration activities, and pave the path for a self-reliant and technologically advanced India.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2023 represents a significant overhaul of India's mining regulations. It introduces substantial changes to the mining sector, with a particular focus on critical minerals, exploration licenses, and the auctioning of mineral concessions.
Critical minerals, including lithium and cobalt, are of paramount significance for cutting-edge technologies and clean energy solutions. This bill addresses their importance by creating opportunities for private sector involvement in mining, granting the Central Government the authority to auction mineral concessions, and introducing exploration licenses. These measures are crafted to stimulate domestic production and reduce reliance on mineral imports.
The allocation of Exploration Licenses (EL) will be conducted through a reverse bidding process, wherein the preferred applicant will be the one offering the lowest percentage bid. This approach is strategically designed to attract foreign investment and encourage junior mining companies to invest in India's mineral sector, thereby promoting the exploration of deep-seated and critical minerals.
[1] https://prsindia.org/billtrack/the-mines-and-minerals-development-and-regulation-amendment-bill-2023
[2] The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, 02 AUG 2023 5:10PM by PIB Delhi
[3] The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, Amendment of First Schedule, Part B
[4] The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, Amendment of First Schedule, Part D
[5] The Mines and Minerals (Development and Regulation) Amendment Bill, 2023.
[6] The Mines and Minerals (Development and Regulation) Amendment Bill, 2023, Insertion of new Schedule.
[7] https://pib.gov.in/PressReleasePage.aspx?PRID=1945102
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