India to offer extended mining lease tenure

2nd February, 2015: Paving the way for auctioning mineral mining licences and reforming the country’s mining sector, the Indian government is expected to frame rules for a uniform lease period of 50 years.

The mining lease tenure rules would be framed under the Mines, Minerals (Development and Regulation) Ordinance 2015, which would be placed before Parliament this month and would incorporate changes decided by law makers, an official in the Mines Ministry said.

The Mines Ministry started consultations with all mineral-bearing provinces prior to the framing of the rules to open up the sector, as local governments would be empowered to have their own systems of certification and monitoring for certain minerals. The federal government would have to approve these systems.

According to the Mines Ministry’s rules pertaining to mining leases, until recently, mineral mining lease tenure varied between a minimum period of 20 years and maximum of 30 years, and each renewal was valid for maximum of another 20 years.

The official said that all existing mining leases granted before the start of the ordinance in January 2015, would automatically be extended until the end of March 2020 in the case of noncaptive mines, and until the end of March 2030 in the case of captive mines.

When the lease period expired, the mining lease for the resource block would be put up for fresh auctions, he said.

The rule was expected to avoid logjams.

A large number of iron-ore and manganese mines operating in Odisha had been closed down under orders of the Supreme Court, which held that continued operation of these mines, with second or subsequent renewals of mining leases pending for several years, was illegal.

In a related move, the Mines Ministry would also frame rules for the imposition of a levy equivalent to 2% of the royalty payable by the miners to fund the National Mineral Exploration Trust to undertake exploration of mineral resources across the country.

A draft note on the proposed rules stated that the government would permit private exploration of mineral resources, which until now had been the exclusive domain of government agencies like Geological Survey of India (GSI) and Mineral Exploration Corporation Limited. The exploration fund would be used as a risk fund to support companies undertaking such projects.

According to the Ministry report, GSI identified 571 000 km2 of geological potential across the country but no projects had been undertaken to explore this potential largely owing to a shortage of technological and fund resources available with government agencies. 

Courtesy: Mining Weekly