Dec 31, 2021Amendments in Mining Laws
On March 28, 2021, the Parliament amended the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’) by way of an amending Act (‘MMDR 2021 Amendment’). Further, on November 02, 2021, the Central Government also amended the Minerals (Other than Atomic and Hydrocarbon Energy Mineral) Concession (Fourth Amendment) Rules, 2021 (‘MC Rules’). Some of the key legislative changes effected by way of the MMDR 2021 Amendment read with the current MC Rules are as under:
i. Transfer of Mining Lease: Prior to the MMDR 2021 Amendment, transfer of a mining lease granted otherwise than through auction was permitted with the prior approval of the relevant State Government only if such mining lease was used for captive purpose (e., entire quantity of mineral extracted is used in a manufacturing unit of the lessee). As per the then applicable rules, such transfer attracted (a) an upfront payment of 0.5% of value of estimated mineral reserves; and (b) an amount equal to 80% of the royalty payable on the minerals raised and removed.
After the enactment of the MMDR 2021 Amendment read with the current MC Rules, all mining leases granted other than by way of auction can be transferred with the prior approval of the relevant State Government, irrespective of end use of mineral. Further, no transfer charges will be payable in connection with such transfer. This legislative change is likely to facilitate mergers and acquisitions related transactions in mines and minerals industries.
ii. Lapsing of Mining Lease: Prior to the MMDR 2021 Amendment, a mining lease would lapse if the leaseholder does not undertake ‘mining operations’ for a continuous period of two years. By way of the MMDR 2021 Amendment, the mining lease will now lapse on the failure to undertake production (winning or raising of mineral within the leased area for the purpose of processing or dispatch) and dispatch (removal of minerals or mineral products from the leased area and also includes consumption of minerals and mineral products within leased area) for a continuous period of two years. Accordingly, now mining leaseholders would not be able to avoid lapsing by merely carrying out ‘mining operations’ but would also need to produce and dispatch minerals.