mines and minerals

In this article, Pradipta Nath pursuing M.A, in Business Law from NUJS, Kolkata discusses Regulatory and Legal framework governing Mines & Minerals in India.

Mineral in any country plays an important role in upgrading the economy for any Sovereign estate and especially for a developing country like India. The energy sector does need special attention so that the minerals are utilized to the greatest good to the greatest numbers and not exploited for personal selfish needs and desire.

At first, there was no law in India for governing the mineral sector and the natural resources were often get exploited without any Control, conditions and rules which results in accumulation of money into few hands and often the growth of mafias. Thereafter the new laws came were drafted to govern the Minerals of India.

Legal Framework on Minerals mining in India

The Mines and Minerals (Development & Regulation) Act (MMDR), 1957 is the principal legislation that governs the mineral and mining sector in India. The Act is a central legislation in force for regulation of mining operations in India. Under the act, minerals are taken under two broad heads, major minerals and minor minerals. The list is lucid.

The power to frame policy and legislation on the minor minerals are entirely the subjected and delegated to the State Governments while policy and legislation relating to the major minerals are dealt by the Ministry of Mines under Union /Central Government of India. The central government has the power to notify “minor minerals” under section 3 (e) of the MMDR Act, 1957. On the other hand, as per Section 15 of the MMDR Act, 1957 State Governments have complete powers for making Rules for grant of concessions in respect of extraction of minor minerals and levy and collection of royalty on minor minerals.

Whereas in case of offshore areas (territorial Waters, Continental Shelf, Exclusive Economic zone and other Maritime zones of India), the ownership of minerals vests exclusively with the Central Government. In order to regulate the mining and development of minerals in the offshore area, the Parliament has enacted the “Offshore Areas Minerals (Development and Regulation Act, 2002”. The Act empowers the Central Government to grant mineral concessions for offshore areas and collect royalty. The Indian Bureau of Mines has been notified as the administrative authority for concession management of offshore areas.

Developments under The Mines and Minerals (Development and Regulation) Act, 1957

Where there is inadequate evidence to show the existence of mineral contents of any notified mineral in respect of any area, a State Government has to obtain previous approval from the Central Government for granting a prospect licence-cum-mining lease for the said notified mineral in areas in accordance with the procedure laid down in section 11.

A holder of a mining lease or a prospecting licence-cum-mining lease granted in accordance with the procedure laid down in section 10B or section 11 may, with the previous approval of the State Government, transfer his mining lease or prospecting licence-cum-mining lease, as the case may be, in such manner as may be prescribed by the Central Government, to any person eligible to hold such mining lease or prospecting licence-cum- mining lease in accordance with the provisions of this Act and the rules made thereunder.

Constitution of Special Courts

U/s 30B (1) The State Government may, for the purposes of providing speedy trial of offences for contravention of the provisions of sub-section (1) or sub-section (1A) of section 4, constitute, by notification, as many Special Court.

U/s 30B (2) A Special Court shall consist of a Judge who shall be appointed by the State Government with the concurrence of the High Court of the State.

U/s 30B (3) A person shall not be qualified for appointment as a judge of a Special Court unless he is or has been a District and Sessions Judge.

  1. U/s 30B (4) Any person aggrieved by the order of the Special Court may prefer an appeal to the High Court within a period of sixty days from the date of such order.
  2. Special Courts to have powers of Court of Session: – U/s 30C. The Code of Criminal Procedure, 1973, applies in the proceedings before the Special Court and for the purpose of the provisions of this Act, the Special Court is deemed as a Court of Session and contain all the powers like of a Court of Session and the person conducting a prosecution before the Special Court is a public prosecutor for the purpose of this Act.
  3. The Central Government prescribe the terms and conditions, and procedure, for the auction which is conducted, including the bidding parameters for the selection, which include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them.
  4. The Central Government also framed the following rules for implementing the provisions of the MMDR Act under the Amendment made in the year 2015.
  5. Minerals (Evidence of Mineral Contents) Rules, 2015:- This provides the set of rules that set the procedures to be followed for conducting any exploration to determine the mineral content and to take up the mineral blocks for auction and mineral concessions.
  6. Mineral (Non-exclusive Reconnaissance Permits) Rules, 2015:- It laid down the process to be followed for grant of Non-exclusive Reconnaissance Permit.
  7. Mineral (Auction) Rules, 2015:- It contains the rules for auction with respect to grant of concessions over the minerals in India.
  8. National Mineral Exploration Trust Rules, 2015:- it laid down the objectives, functions and operations of the National Mineral Exploration Trust.

National Mineral Exploration Trust

Under Section 9C (1), The Central Government established a Trust, called as the National Mineral Exploration Trust which is a Non Profit Organization. The object of the Trust is to use the funds accrued to the Trust for the purposes of regional and detailed exploration in such manner as may be prescribed by the Central Government.

Functions of MET

  • MET carries out regional (inter-state) and detailed exploration for minerals including those activities deemed necessary by the Governing Body of MET. Some such sanctioned activities include:
  • Funding special studies and projects designed to identify, explore, extract, beneficiate and refine deep-seated or concealed mineral deposits; Priority is given to strategic and critical minerals.
  • Undertaking studies for mineral development, sustainable mining, adoption of advanced scientific and technological practices and mineral extraction metallurgy;
  • Facilitating completion of brown-field regional exploration projects in obvious geological potential areas (G3) including conducting high-risk exploration for deep-seated mineral deposits through modern technologies;
  • Promoting completion of detailed exploration (G2 or Gl) across India in the areas where G3 stage exploration has been completed;
  • Deciding the priorities for exploration after consulting Central Geological Programming Board facilitating geophysical, ground and aerial survey and geochemical survey of obvious geological potential areas and rest of India; Facilitating a national core repository for encouraging research in earth sciences and for evaluation of the mineral prospects;
  • Organizing capacity building programmes to raise technical capability of personnel engaged in or to be engaged in exploration

District Mineral Foundation

  • Setting up of District Mineral Foundations (DMFs) in all districts in the country affected by mining related operations was mandated through the Mines and Minerals (Development & Regulation) Amendment Act, (MMDRA) 2015.
  • Every holder of a mining lease or a prospecting licence-cum-mining lease shall, in addition to the royalty, pay to the District Mineral Foundation of the respective concerned districts in which their mining operations are carried on.
  • If the mining area is spread across and operated at several districts, the fund is shared on a pro-rata basis by these districts. DMF contribution do not be exceed one-third of royalty and the Central Government retains the power to prescribe the rates of contribution, though DMF’s operation is under state governments. The contributions made to DMFs are collected by the State Governments.
  • Under the above mentioned MMRD Amendment Act of 2015, a provision was made also to create a National Mineral Exploration Trust under the jurisdiction of central government, with 2% of royalty levied, for boosting detailed exploration of minerals in India.

Period of granting mining lease for minerals other than coal, lignite and atomic minerals

  • U/s 8A (2) on and from the date of the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015, all mining leases shall be granted for the period of fifty years.
  • U/s 8A (1) The provisions of this section shall apply to minerals other than those specified in Part A and Part B of the First Schedule.
  • All mining leases granted before the commencement of the Mines and Minerals (Development and Regulation) Amendment Act, 2015 will also be deemed to have granted lease for a period of fifty years too.
  • On the expiry of the lease period, the lease shall be put up for auction as per the procedure specified in this Act.
  • Any holder of a lease where mineral is used for captive purpose will have the right of first refusal at the time of auction held for such lease after the expiry of the lease period.

The gist of Offshore Areas Minerals (Development & Regulation) Act, 2002

  • The Act is applicable to all minerals in offshore areas including minerals prescribed under Atomic Energy Act, 1962, but excludes oils and related hydrocarbons as there is separate legislation for them in force. The Act came into effect from 15.1.2010 vide S.O.338(E), dated 11.2.2010 notified by the Central Government.
  • Indian Bureau of Mines has been notified as the ”administering authority” and ”authorised officer” under Section 4 and Clause (i) of Section 22 of the Act vide S.O.339 (E) and 340(E) dated 11.2.2010. The Secretary, Ministry of Mines has been notified as ”authorised officer” to hear and decide cases relating to Clauses (a) and (b) of Section 28(1) vide S.O.341 (E) dated 11.2.2010.
  • The Act empowers the Central Government to make rules for the purpose of the Act including terms and conditions under the reconnaissance permit, exploration licence, production lease, etc.
  • The Government of India had announced the New Exploration Licensing Policy (NELP) in 2000 under which blocks for exploration of oil and gas were on offer for bidding. The NELP provides an international class fiscal and contract framework for exploration and production of hydrocarbons.

The Indian Bureau of Mines (IBM)

  • The Indian Bureau of Mines (IBM) established in 1948, is a multi-disciplinary governmental organisation under the Department of Mines, Ministry of Mines, engaged in promotion of conservation, scientific development of mineral resources and protection of environment in mines other than coal, petroleum & natural gas, atomic minerals and minor minerals.
  • The primary mission of Indian Bureau of Mines is to promote systematic and scientific development of mineral resources of the country (both onshore and offshore), through regulatory inspections of the mines, approval of mining plans and environmental management plans to ensure minimal adverse impact on environment.
  • It carries out inspection in mines, provides approvals of mining plans and mine closure plans. It also conducts environmental studies to minimise environmental impact due to mining.

Offshore Areas Mineral Concession Rules, 2006

  1. The Offshore Areas Mineral Concession Rules, 2006, lay down the process for grant and renewal of reconnaissance permits, exploration licenses and production leases as per provisions of Section 35 of the Offshore Areas Mineral (Development and Regulation) Act, 2002.
  2. The rules prescribe for measures for protecting the marine environment and safety measures to be followed in the leased area.
  3. The rules also define the operational guidelines for each concession granted under the act.

Mines Act, 1952

The preamble of the Act laid down that it “an Act to amend and consolidate the law relating to the regulation of labour and safety in mines”.

The Act consists of 88 sections in 10 chapters. The Mines Act, 1952 is a sort of welfare legislation which prescribes the laws relating to the regulation of labour and their safety in mines. The act also regu­lates for carrying out mining operations and management of mines. It lays down the basic provisions for health and safety of people em­ployed in mines and regulates their working conditions. It also has provisions relating to in­spection of mines and procedure of reporting to be followed.

Sec.8 – powers of special officers to enter, measure etc.

Sec.9 – facilities to be afforded to Inspectors

Sec.19 – Provisions for drinking water

Sec.28 – Weekly day of Rest

Sec. 29 – Compensatory day of Rest

Sec. 30 – Hours of work above the ground

Sec.31 – Hours of work below the ground

Sec.40 – employment of persons below 18 years of age

Sec.45 – prohibition of presence of persons below 18 years of age in a mine

Section 2(JJ) of the Mines Act of 1952 defines the term ‘minerals’ as meaning ‘all substances which can be obtained from the earth by mining, digging, drilling, dredging, hydraulic, quarrying or by any other operation and includes mineral oils (which in turn include natural gas and petroleum)’.

The Supreme Court of India in Ichchapur Industrial Co-operative Society Limited v. The Competent Authority, Oil and Natural Gas Corporation and Another (1997(1) SC.130, Judgement Today) has held that the term ‘mineral’ as defined in the Mines Act of 1952, includes water as well. (Link: https://indiankanoon.org/doc/1921600/)

Mines Rules, 1955

  1. The Mines Rules, 1955 provides the provision for engaging a medical officer for examination the persons employed at mines.
  2. The rules also provided the basic health and sanitation provisions and welfare amenities for the miners and their families.
  3. The clearances required for exploring or mining an area under a grant depends on the type of concession.

A list of indicative clearances, approvals and permits may be included as a part of the Tender Document at the time of auction by a State Government.

Some of the mandatory clearances/ approvals, inter alia, required for commencement of exploration or mining operations include:

  • Environment and Forest Clearance
  • Wildlife Clearance (sanctuary/ reserve/ special zone clearances)
  • Land Owner’s Consent
  • Explosive License
  • Permission for Mine Opening
  • Transmission line from State Transmission / Distribution Companies

The Forest (Conservation) Act, 1980

As stated in the preamble of the Act that, “An Act to provide for the conservation of forests and for matters connected therewith or ancillary or incidental thereto”.

  1. The Act put mandate over the State Government to have consultation and approval before declaring any forest as ‘Non-Forest’ zone which has been specifically reserved as ‘Forest Zone’.
  2. The power to make rules under the Act has been delegated to the Central Government.

Types of Concessions

As per the MMDR Act 2015 (Amendment), the following two types of License which are granted to the bidders: –

There are two types of licence/lease –

  1. Mining Lease
  2. Composite License

These are electronically obtained after applying on the auction process under the Mines and Minerals (Development and Regulation) Amendment, Act 2015. This is also at par with the Mineral (Auction) Rules, 2015 notified by the Centre. The rules made it clear that auctioning will be done on a forward auction basis where the highest bid above the reserve price will win. The winner will have to undertake exploration in the area. If the winner fails to find mineral content, the licence will lapse and the mining lease shall be cancelled.

Role of Government: The Government will initiate an auction process for grant of a mining lease with respect to an area within the State. It will issue a notice inviting tender (NIT) with respect to mineral auction, identify and demarcate the area where a mining lease is proposed to be granted through auction by using total station and differential global positioning system. It is also required to classify the area so demarcated into forests land, land owned by the State Government and land not owned by the State Government.

The tender document will also include estimated mineral resources and brief particulars regarding evidence of mineral contents and list of all clearances and permissions obtained with respect to such area in order to commence mining operation.

  1. Minerals are classified into minor minerals and major minerals.
  2. Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act) is the main Act to govern the Minerals in India.
  3. The Offshore Areas Mineral (Development and Regulation) Act 2002 regulates the development of mineral resources in territorial waters, continental shelf, exclusive economic zone and other maritime zones of India.
  4. The following licences are issued by the state government under the Mines and Minerals (Development and Regulation) Act 1957 (MMDR Act):
  5. Reconnaissance permit (RP):an RP is for the purpose of undertaking reconnaissance operations and is a right to perform any operations undertaken for preliminary prospecting of a mineral.
  6. Prospecting licence (PL):a PL is for the purpose of undertaking operations with respect to exploring, locating or proving mineral deposits.
  7. Mining lease (ML):an ML is a lease, which also includes a sub-lease, for the purpose of undertaking mining operations with respect to extracting minerals from the relevant mine.
  8. Where there is a breach of any condition imposed on the holder, the RP, ML or PL can be cancelled by the relevant state government and/or the amount deposited as security deposit (as applicable) may be forfeited in whole or in part.
  9. The central government can, after consultation with the relevant state government, cancel an ML or a PL if it is in the public interest to do so (MMDR Act).

References

https://uk.practicallaw.thomsonreuters.com/0-562-4168?transitionType=Default&contextData=(sc.Default)&firstPage=true&bhcp=1

  1. http://ibm.nic.in/writereaddata/files/07102014115602MMDR%20Act%201957_10052012.pdf
  2. http://www.mines.nic.in/writereaddata/UploadFile/Offshore_Areas_Mineral_Development_Regulation_Act_2002.pdf
  3. http://www.mines.nic.in/writereaddata/UploadFile/Offshore_Areas_Mineral_Development_Regulation_Act_2002_12th_February_2010.pdf
  4. http://www.mines.nic.in/writereaddata/UploadFile/Offshore%20Areas%20Mineral%20Concession%20Rules,%202006.pdf
  5. http://www.mines.nic.in/writereaddata/UploadFile/ExplorationandMiningEbook.pdf
  6. http://lawmin.nic.in/ld/P-ACT/1980/The%20Forest%20(Conservation)%20Act,%201980.pdf
  7. https://www.legalcrystal.com/act/52074/mines-act-1952-complete-act
  8. http://www.thehindubusinessline.com/companies/mineral-rules-govt-comes-out-with-two-types-of-licences/article7236267.eceConclusion
  9. http://www.mines.nic.in/writereaddata/UploadFile/acts.pdf
  10. http://arthapedia.in/index.php?title=National_Mineral_Exploration_Trust
  11. http://www.mines.nic.in/writereaddata/UploadFile/acts.pdf
  12. http://ibm.gov.in/writereaddata/files/07092014124800IMYB_2012_11_31%20OFFSHORE%20REGIONS.pdf

 

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