Deep mining: Over 500 non-coal mineral blocks up for grabs

Over 500 non-coal mineral blocks, partially or minimally explored under current leases, but are entangled in legacy issues and litigation, will be up for grabs as the Cabinet is learnt to have approved a proposal to amend the relevant law for their re-allocations through competitive bidding. Also, the employment-intensive, but highly under-invested sector, will get a fillip from a Cabinet decision to do away with end-use restrictions for miners. Those with captive leases will be allowed to sell the minerals in the open market.

Sources said the Cabinet also gave the go-ahead for reallocation of several non-producing blocks of the state-run companies, a move that could also enthuse the private players as many of these blocks have abundant proven resources.

The moves are in sync with the National Mineral Policy, which aims to increase the domestic production of non-coal, non-fuel minerals by 200% in seven years with a greater private sector participation.

The leases stuck in disputes and legacy issues have failed to start production even after a 5-year window provided under the Mines and Minerals (Development and Regulation) Act in 2015. The rescinding of the relevant sections of the Act will bring these leases back in the hands of state for prompt reallocation, the sources said. The current holders of these leases will be compensated for exploration expenditure incurred by them, by dipping into the funds under the National Mineral Exploration Trust (NMET).

Mineral-potential areas will be put to auction offering seamless prospecting licence-cum-mining-leases and this will add to certainty of tenure and will come in handy for potential investors with deep pockets and appetite for long-gestation projects.

“These amendments will make a large number of mines available for auctions. It will help us strengthen the ‘auction-only’ regime and boost transparency in the system,” an official source said.

The investor-friendly measures are taken as part of the Atmanirbhar Bharat scheme for the mining sector announced by finance minister Nirmala Sitharaman in May last year.

While the distinction between captive and non-captive mines will be removed, captive miners will likely augment production for sale in the open market, boosting supplies in the country. This also means that the preference to ‘captive’ users will go and, instead, all mines will be available for anyone including commercial miners. Captive mines will be allowed to sell up to 50% of the minerals excavated.

The sources added that as in the coal sector, it is proposed to provide 50% rebate in the quoted revenue share for non-coal mineral lease holders, for the quantity of mineral produced and dispatched earlier than scheduled date of production. Further, the cabinet has also cleared the long-pending demand of the industry for waiver of charges for transferring mineral concessions for non-auctioned captive mines.

Given that hefty levies are making India’s mineral sector globally uncompetitive – the effective tax rate (ETR) on mining in India is about 64% which is highest in the world where in other mineral-rich countries it ranges between 34-38 % – , the government has also proposed to bring in necessary amendments to the Indian Stamp Act, 1989, to bring in uniformity across states in calculation of stamp duty. However, it remains to be seen if these will be duly complied with by states, as royalty from minerals and stamp duties on these items are large revenue sources for mineral-rich states.

The cabinet has also approved introduction of an index-based mechanism by developing a National Mineral Index (NMI) for various statutory payments and others for future auctions. At present, the average sale price (ASP) is the basis for calculation of various statutory payments, which is subject to distortions due to absence of sale price data for some minerals, differences in prices across states, etc. A committee will be constituted to examine the issue, the sources added.