The mining industry is extensively governed in India and over the past five years, the legislative framework has evolved dramatically, resulting in a more transparent and efficient system. India produces 95 minerals, including 4 fuel related, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals. India is a major producer of precious minerals such as chromite, iron ore, coal and bauxite. Rajasthan contributes the most to the country’s mineral production, followed by Odisha. The mining acts and regulations are being updated to ensure the industry’s ease of doing business.
Significant influencing variables include government-led policy reforms that have resulted in a visible shift in the mining industry, such as the relaxation of mineral exploration standards. The Mines and Minerals Amendment Bill, 2021, has also introduced a number of reforms and changes in the mining sector. Key amendments under the act are enhancing private participation, defining illegal mining, removing the distinction between captive and non-captive mines, developing a national mineral index and moving towards an auction regime.
Currently, exploration and mining policies are centred on the extraction of surface minerals such as bauxite, iron ore, limestone and coal, while India continues to import over $100 billion worth of minerals. The majority of these are deep-seated, strategic and precious minerals/metals such as gold, copper, zinc and nickel.
More favourable policies that encourage the opening of exploration and mining of such minerals through global e-auction and allow private players to pick areas of interest, define the block, and explore and mine to keep pace with the rising demand can be a game changer for India’s aim of becoming a $5 trillion economy.
Policy stimulus
In a bid to liberalise the coal mining sector, the government notified the Mineral Laws (Amendment) Ordinance, 2020, which opened up coal mining to non-coal companies, removed restrictions on the end-use of the fuel and introduced flexible criteria for bidder participation. This also marked the first set of coal assets to be auctioned through the new market-determined revenue share model, replacing the fixed fee per tonne regime. A total of 41 coal blocks (later revised to 38) were put out for auction during 2020. A total of 19 blocks (with around 51 mtpa capacity) spread across five states – Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand and Maharashtra – were bid out.
The Minerals (Evidence of Mineral Contents) Second Amendment Rules, 2021, and the Minerals (Auction) Fourth Amendment Rules, 2021, have been revised requiring relevant state governments to consider and approve exploration projects within 120 days. In January 2021, the government launched a single-window clearance portal, a unified platform that facilitates the grant of clearances and approvals required for starting a coal mine in the country. As part of the government’s Rs 20 billion stimulus package under the Atmanirbhar Bharat Abhiyan, an exploration-cum-mining-cum production regime will be introduced to enhance private investments in mining. Besides opening up coal mining, joint auction of bauxite and coal mineral blocks will be launched to enhance the aluminium industry’s competitiveness. A total of 500 mining blocks will be offered through an open auction process.
The Mines and Minerals (Regulation and Development) Act includes a number of substantial improvements that will enhance the mineral mining industry to become more competitive and productive. The proposed amendments to the act include redistribution of non-producing blocks belonging to public sector undertakings, provision for an additional royalty payment to the state in lieu of a mining lease extension, establishment of a national mineral index, removal of the distinction between captive and merchant mines, taxation and rationalisation of stamp duty and cessation of a mining lease as a penalty for not maintaining the specified production levels for three consecutive years.
Centre’s tech ambitions
The government intends to develop digital infrastructure and adopt new technology to aid in the operation of present and future coal mines. The measure is designed to reduce dry fuel imports. Additionally, the plan contains a multi-speed information technology and infrastructure system that enables the quick implementation of new technologies. To reduce reliance on imports, it is also important for Coal India Limited to achieve the 1 billion tonne target by 2024, thereby embarking on a journey of technological change. The primary aim of this road map is to enable technology in coal mines in order to transform the entire business value chain, by leveraging digital technology for improving performance in coal mines and increasing productivity, safety and sustainability, while reducing the environmental impact through an upgradation of conventional technologies to new technologies.
Going forward
India has an enormous mineral potential, with mining licences granted for a 50-year period that is both long and consistent. India’s geographical location encourages exports and demand for specific metals and minerals is predicted to expand dramatically over the next 15 years. The government intends to implement additional mining reforms soon in order to promote the most efficient use of the country’s natural resources. The introduction of the National Mineral Policy in India in 2019 represents an important investment opportunity. The mining sector in the country is expected to undergo significant changes in the coming years as a result of reforms such as the Make in India campaign, the Smart Cities Mission, rural electrification and a focus on building renewable energy projects under the National Electricity Policy, as well as increased infrastructure development.