Mineral Laws (Amendment) Bill 2020

The Parliament has made amendments to the Mines and Minerals (Development and Regulation) Act, 1957 and The Coal Mines (Special Provisions) Act, 2015, and passed the Mineral Laws (Amendment) Bill 2020 on 12th March 2020.

Amendments to the Mineral Law

The following companies can also participate during the bidding of coal/lignite blocks:

Coal Mining Companies that don’t have any experience in coal mining in India
Companies that have experience mining some other mineral in another country

This implies that mining companies other than coal are also allowed moreover, the mining experience does not necessarily have to be in India.

End-Use Restriction has now been removed for companies to participate during Schedule-II and Schedule-III coal mine auctions.
Prospecting License cum Mining Lease (PL-cum-ML) are now allowed for coal or lignite.
The company that wins the bid is now allowed to use the coal that is mined in a plant owned by the company or by its subsidiaries or holding company.
The amendment allows the coal mine to be allocated to the next successful bidder or allottee if the allocation to the winning bidder or allottee is terminated. The clearances already obtained (environment, forest and other approvals) automatically get transferred to the new owner for a period of 2 years from the date the new lease has been granted.
All Auctions for mining leases are now allowed to start before the existing lease period expires.
For the sake of management of mines that are under production but whose allotment order stands cancelled, the Government has introduced a provision to appoint a designated custodian. These mines are other than the Schedule-II mines.
The new amendment has now permitted companies that already hold Non-exclusive Reconnaissance Permits (NREP) to apply for PL-cum-ML, which is expected to boost mineral exploration.
Several provisions that were either repeated or redundant in The Mines and Minerals (Regulation and Development) MMDR Act, 1957 and Coal Mines (Special Provisions) Act, 2015 have now been removed.

Impact of Amendment on Coal Sector

Allowing mining companies in other minerals and also those with experience in coal mining in other countries will also pave the way for Foreign Direct Investment policy implemented in the Coal Sector.
Removing the End Use Restriction will imply a number of companies participating in the auction with a wide variety of purposes (consumption by self, selling coal or any other as specified by the Central Government). This again increases the usage of Coal mined in India.
The composite prospecting license (finding if coal is available and mining is viable in a location) and mining lease makes it much easier for the companies to do business in Coal Sector with minimal investment of time in bidding or paperwork involved to get the mining lease separately.
By automatically transferring the approvals and clearances already obtained to the new mining company for a period of two years, the Government removes the roadblocks in getting the fresh issue of environmental clearances.
Allowing the auction of mining lease to start before the older lease expires ensures continuity of mining and thus the production since the Government gets more time to decide the company that will be best suited before the lease expires.
The new bill will promote ease of doing business in the Indian coal & mining sector to a large extent because of removing provisions from the MMDR Act and CMSP Act that were repetitive and redundant.
There will be a big boost to coal production in India which will reduce the need to import coal from other countries.

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Frequently Asked Questions

Common questions about Mineral Laws Amendment Bill 2020.

The key amendments include allowing coal mining companies without prior experience in India and companies with experience in mining other minerals in other countries to participate in coal/lignite block auctions. It also removes the end-use restriction for companies participating in Schedule-II and Schedule-III coal mine auctions, allowing the use of mined coal in plants owned by the company or its subsidiaries/holding companies. Additionally, it introduces provisions for granting Prospecting License cum Mining Lease (PL-cum-ML) for coal or lignite and transferring existing clearances to new owners for two years.

The amendment promotes ease of doing business in the Indian coal and mining sector by removing redundant provisions from previous acts and allowing foreign companies with mining experience to participate in auctions. This is expected to attract Foreign Direct Investment (FDI) in the coal sector. It also ensures continuity of coal production by allowing auctions before the expiry of existing leases and transferring clearances to new owners, reducing import dependency.

Removing the end-use restriction implies that a wider variety of companies can participate in the coal mine auctions for various purposes, such as self-consumption, selling coal, or other uses specified by the Central Government. This increases the potential utilization of coal mined in India, promoting greater efficiency and economic benefits.

The introduction of PL-cum-ML allows companies to obtain a composite license for both prospecting (exploring the viability of coal mining) and mining lease, streamlining the process and reducing the time and investment required for separate bidding or paperwork. This promotes ease of doing business in the coal sector.

Allowing auctions to start before the expiry of existing leases ensures continuity of mining and coal production. It provides the government with more time to decide on the most suitable company for the next lease before the current one expires, preventing disruptions in the supply chain.

The amendment introduces a provision to appoint a designated custodian for the management of mines other than Schedule-II mines that are under production but whose allotment order stands cancelled. This ensures the continuity of operations and prevents disruptions in coal production.

Permitting companies that already hold Non-exclusive Reconnaissance Permits (NREP) to apply for PL-cum-ML is expected to boost mineral exploration efforts in the country. This can lead to the discovery of new coal or lignite reserves, supporting the long-term growth of the mining sector.

By automatically transferring the existing environmental, forest, and other approvals to the new owner for two years from the date of granting the new lease, the amendment removes roadblocks in obtaining fresh clearances. This streamlines the process and reduces delays, promoting efficiency and ease of doing business in the mining sector.

Removing repeated or redundant provisions from the Mines and Minerals (Development and Regulation) Act, 1957, and the Coal Mines (Special Provisions) Act, 2015, simplifies the regulatory framework and eliminates unnecessary complexities. This contributes to the ease of doing business in the Indian coal and mining sector.

By allowing mining companies from other countries with experience in mining other minerals to participate in coal/lignite block auctions, the amendment paves the way for Foreign Direct Investment (FDI) in the Indian coal sector. This can bring in new technologies, expertise, and capital, driving growth and development in the sector.