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June 17, 2019

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The New National Mineral Policy, 2019


- Dr. Manoj Kumar, Founder & Managing Partner [ Hammurabi & Solomon ]

Dr-Manoj-Kumar

The New Policy is set out to integrate the country’s overall strategy with economic development and as a result, guide the exploration, extraction and management of minerals

India produces around 88 minerals: four fuel-related minerals, 10 metallic minerals, 50 non-metallic minerals, and 24 minor minerals, approximately 5.3% of the world’s minerals, metals, etc. and is a major country in the production of minerals. The country produces most of the nation’s energy requirements and it is anticipated to make a surplus of 61,670 MU in 2019.

Looking forward, the anticipated growth of India’s GDP, economic development, rapid urbanization, increased infrastructure investment, improved private investment, strong industrial activity, and increasing consumption has in recent years led to the boost in domestic mineral consumption. India falls under the top 10 countries in the world in the production of certain metallic minerals (Bauxite, Chromite, Iron Ore, Manganese Ore), metals (aluminum, steel, zinc), industrial metals (barytes, kyanite, alusite, sillimanite, talc) and mineral fuels (such as coal & lignite).

The Indian Mining industry has attracted more foreign investment in recent years than ever before. In 2014, investment in the mining sector through the Foreign Direct Investment (FDI) route saw a remarkable surge and in 2015 although investments dipped slightly, it has still been relatively higher than the investments prior to 2014.

2014 onwards evidently investments in the mining sector have been incentivized and the climate has been made very investor-friendly.

Policy

National Mineral Policy 2008 to National Mineral Policy 2019

There was a rising need to remodel mining policy eco-system and the regulatory regime surrounding it, as governed under the National Mineral Policy of 2008, in order to enable the mining industry to cope with the growing market and investments. The impetus to review the National Mineral Policy, 2008 came about by way of a direction from the Hon’ble Supreme Court of India vide its judgment dated 02.08.2017 in Writ Petition (Civil) No. 114/2014 titled Common Cause v. Union of India & Others. In compliance with the directions of the Apex Court, the Ministry of Mines (Union of India) constituted a committee on 14.08.2017 under the chairmanship of the Additional Secretary, Ministry of Mines, to review the National Mineral Policy, 2008. The Committee had members from Central Ministries/Departments, State Governments, Industry Associations and Subordinate offices of Ministry of Mines. Based on the deliberations held at Committee meetings and stakeholders’ comments/suggestions, the Committee Report was prepared and submitted to the Ministry of Mines whereby the National Mineral Policy, 2019 (“The Policy”) was introduced to redefine and re-characterize the mining regime and enable the country to cope with the growing trend of the mining industry and fast developing technology and mechanisms surrounding it.

The policy was set out to integrate the country’s overall strategy with economic development and as a result guide the exploration, extraction and management of minerals. The regulatory environment was proposed to be re-modeled in the manner proposed in the Policy to make it conducive to the ease of doing business with simpler, transparent and time-bound procedures. The policy majorly touched on topics such as the promotion of domestic industry; reduction in import dependency; simpler, transparent and time-bound clearances; efficient regulatory mechanism; high penetration of e-governance systems, employment generation and the requirement for a unified authority.

Key Developments under the National Mineral Policy, 2019

The following is the descriptive overview of the key developments brought about vide the National Mineral Policy, 2019:

(i) Exploration Incentives – In order to attract private investments, make the mining environment conducive to ease of doing business, facilitate & regulate exploration & mining activities, making provisions for development of infrastructure and tax collection, the Policy proposes simpler, transparent and time-bound procedures for obtaining of clearances, incentives to be granted for the use of state-of-the-art technologies in exploration of minerals. It proposes the introduction of the Right of First Refusal at the time of auction and seamless transition from Reconnaissance Permit to Prospecting License to Mining Leases or auctioning of composite Reconnaissance Permit cum Prospecting License cum Mining Lease in virgin areas on revenue sharing basis or any other appropriate incentive as per international practice.

These processes are to be facilitated through and e-governance/online public portal having provision of generating higher level triggers in event of delay. The Policy proposes that the Government shall endeavor to design fiscal measures conducive to the promotion of mineral exploration & development, given the changing mineral scenario and economies of mineral development & products. Therefore, fiscal changes are to be examined from time to time with the country’s tax structure and through normal budgetary processes. Further, it was also proposed that efforts to benchmark and harmonize royalty, levies and taxes with mining jurisdictions round the world are to be made in order to make India an attractive destination for exploration & mining. The Policy with the purpose to make risk capital available for exploration proposes that the mining sector be given an independent industry status and steps be taken to facilitate financing activities such as prospecting, exploring and mine development. Further, in order to receive financial support from financial institutions, mining is proposed to be made an eligible activity.
(ii) Security of Tenure – Over and above the transparency concession granting procedure and seamless transferability of concessions, the policy assures security of tenure of concessionaire and increased trust levels in the process of assuring the same by way of inclusive policies, increased responsiveness, better regulation, openness and fairness.
(iii) Inviolate/No-Go Areas – In order to safeguard and protect critically fragile areas from increased mining activity, the Policy provides that the Government should identify such areas in terms of ecology and declare them as “Inviolate/No-go Areas” which would be out of bounds for mining. In order to achieve better semblance between mineral-based development & environment, an endeavor to create Exclusive Mining Zones (EMZs) with prior in-principle statutory clearances demarcated for the mineralized belt/zone should be made to avoid conflict of interest and curtail delay in commencement of mining operation.
(iv) District Mineral Foundation (DMF) – In the interest & for the benefit of persons and areas affected by mining and related activities, the establishment of DMF guided by provisions of Pradhan Mantri Khanij Khetra Kalyan Yojana (“PMKKKY”) is proposed in order to provide inclusive and equitable development of project affected persons and areas. The Policy proposes that the Government is to monitor & review the implementation of the schemes under DMF for giving effect to PMKKKY and further that a national web portal in this respect be developed with free access to the public.
(v) Inter-generational Equity – The Policy states that the State is the trustee for ensuring that future generations receive the benefit of inheritance and therefore the State is to receive the full value of the extracted minerals. Further, the Policy proposes that the inter-generational equity should be assessed in a disaggregated approach and adopted considering the reserves/resources and potential for reuse through recycling.
(vi) Exclusive Regulatory Authority – The Policy proposes the establishment of a unified authority at national level to ensure mineral development coordinate the fulfilment of the objectives of the policy. It further proposes that a unified authority be constituted in the form of an inter-ministerial body under the Ministry of Mines, with members comprising the Ministry of Coal, Ministry of Earth Sciences, Ministry of Tribal Affairs, Ministry of Rural Development, Ministry of Panchayati Raj, Ministry of Steel, and State Governments.
(vii) Pricing of Mining Commodities – The Policy specifically notes that the approach for enabling further investment through the FDI route will be key to make mineral-based materials available to domestic users at a reasonable price as determined by market forces, thereby implying lesser government influence, which comes across as an attractive incentive for investors.
(viii) Resolving Environmental Issues – The Policy has taken a two-fold stance on the resolution of environmental issues pertaining to the mining industry in India by having highlighted prevention and mitigation as a means to achieve sustainable development and to resolve environmental issues in this backdrop.
(ix) Geological Information – The Policy significantly lays down various guidelines for the purposes of facilitating geological exploration by providing greater clarity on the issues pertaining to access to information with respect to the following:
a. Baseline & Mineral Exploration Data
b. National Inventory of Mineral Resources
c. Mining Tenement System

The above information is intended for open dissemination in a digitized format with automated updates on the concession life-cycle.

Conclusion

The National Mineral Policy 2019 progresses the erstwhile 2008 policy to realize much to the interest of all stakeholders including investors for the mining sector in India. The Policy essentially stresses upon and provides a way forward for the support from financial institutions for risk-induced exploration initiatives, enables a single-window portal through the introduction of the E-governance online public portal and seeks to incentivize to attract private investment in the mining sector in India.

In furtherance of the above, the 2019 policy seeks to make mining a stand-alone industry in India, which gives a serious impetus to attract further industry-specific investment, which is coupled with the introduction of the long-term EXIM Policy for the mining sector, which is a key factor for enabling cross-border operations with respect to the above-mentioned forecasted surplus of 61,670 MU for the year 2018-2019 and see a growth manifolds in years ahead to strengthen resources security for India, to meet India’s recourses demands internally, reduce imports and make India a primary player in the global metals and resources footprint.

Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.

 

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