In the fourth tranche of announcements under Atmanirbhar Bharat Abhiyan package, Finance Minister Nirmala Sitharaman on Saturday announced reforms in the mining sector.

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Under these, the government will auction as many as 500 mineral mines, remove the distinction between captive and non-captive mines, and rationalize stamp duty. It also plans to auction bauxite and coal at the same time, a move that will benefit aluminum companies.

Over 700 mines are stuck without any mineral production for years, under various clauses of Mines and Minerals Development Regulation (MMDR).

Of these, the government will auction 500 mines. Under 10A 2(b) clause of MMDR act pre-auction regime, as many as 524 mines do not have any sunset clause on getting license to mine. Another 200 mines are stuck in legal battles as companies did not get timely clearances to get licence to mine. The 10A(2c) clause of MMDR Act allowed pre-auction regime mines to get a license within two years when the auction of mines began in 2015.

The Finance Minister said the distinction between captive and non-captive mines will be removed. This will need an amendment in the MMDR Act. The idea is to not allow states to reserve and auction mines going forward for captive use. Mining for captive use means particular mineral mines are used for value addition by a company, for e.g. captive use of iron ore mines for producing steel.

The auction regime for minerals began from 2015 and captive mining companies were given an extension for their mining lease up to 2030 with a clause of the right of first refusal in the next auction. The clause on the right of first refusal in the event of an auction of the mining lease expiry will now be deleted to break the distinction of captive and non-captive mines.

“Removal of distinction between captive and non-captive mines will bring a level playing field to the industry and is a fantastic step in order to improve the overall availability of affordable minerals to everyone,” said Sajjan Jindal, Chairman of JSW Group in a tweet.

Announcement on rationalization of stamp duty from current calculation to a new computation has been welcomed by the industry.

“This will provide the much needed relief to the highly taxed Indian mining sector,” said RK Sharma, Secretary General of Federation of Indian Mining Industries.

The government also announced that there will be a joint auction of bauxite and coal to make aluminum manufacturing competitive in India. Both coal and bauxite are the key raw materials in the manufacture of aluminium. India consumed 3.7MT of aluminium of which 60 percent was imported.

“This shall ensure raw material security for the industry. This shall entail sustainable development of Indian aluminium industry and a self-reliant India for meeting its Aluminium demand,” said Rahul Sharma, CEO, Alumina business, Vedanta Ltd.

Changes to the MMDR Act will have to be made to implement the reforms announced today.

First Published:May 16, 2020 8:14 PM IST