Insights
The Mineral Laws (Amendment) Ordinance, 2020
January 13, 2020The Mineral Laws (Amendment) Ordinance 2020, amending various provisions of the Mines and Minerals (Development and Regulation) Act 1965 (MMDR Act) and the Coal Mines (Special Provisions) Act 2015 (CMSP Act), has been promulgated with effect from 10 January 2020. The objective of this Ordinance, amongst others, is to maintain sustained and seamless production of minerals in the country, especially during the period of expiry of leases and their subsequent auctioning.
The Ordinance aims at liberalising norms for entry and relaxing the end-use restrictions to promote both FDI and local investment. Any company selected through the auction process can now carry on coal mining operations. Earlier, only those companies that were in the power, iron and steel, and coal washery business could bid for mines and the bidders needed prior experience of mining in India, which limited the potential bidders and consequently, limited the value that the government could extract from the bidding.
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Specifically, the following amendments have been introduced:
1. Provision for allocation of coal blocks for composite prospecting licence-cum-mining lease (PL-cum-ML) by amending sections 4(2), 5(1), 8(4), 8(8), 8(9) and 31(2)(b) of the CMSP Act and section 11 and 13(2) of the MMDR Act. (Earlier, there was no provision for grant of composite PL-cum-ML for coal/lignite. A block could either be allocated for PL or ML).
2. Clarification that ‘any’ company can participate in the auction process. (Amendment to section 11A of the MMDR Act and section 4(2) and 5(1) of the CMSP Act).
3. Flexibility in deciding end-use of Schedule II and III coal mines. (Omission of sub-section 3 of section 4 of the CSMP Act).
4. Termination of allocations made under the CMSP Act, their reallocation and compensation. (Insertion of sub-sections 13, 15 and 15 to section 8).
5. Appointment of a designated custodian for management of mines under production, except Schedule II mines, whose vesting/allotment order has been cancelled. (Amendment to section 18 of the CMSP Act).
6. Dispensing with the requirement of previous approval of the Central Government in certain cases. (Amendment to sections 5 and 17A of the MMDR Act).
7. Entitlement of the successful allocattee to utilise the coal mined in plants of holding and subsidiary company. (Amendment of Section 20(2) of the CMSP Act).
8. Amendments to sections 9 and 20(1) of the CMSP Act to clarify the language of section 9 (priority of disbursal).
To refer to the Mineral Laws (Amendment) Ordinance 2020, dated 10 January 2020, click here.
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This is intended for general information purposes only. The views and opinions expressed in this article are those of the author/authors and does not necessarily reflect the views of the firm.
