The Mines and Minerals (Development and Regulation) Act: Regulating mining sector and its activities

The mining sector in India contributes around 2.5% of the country’s GDP, employing over 15 lakh people. This sector is regulated by the legislation brought in 1957 known as the Mines and Minerals (Development and Regulation) Act 1957.

This act initially consisted of 33 sections and 6 schedules. The act has undergone many amendments from time to time.

The act got introduced to regulate the mining and prospecting activities, govern the reconnaissance permits, mining leases in the country, etc.

Prospecting is a branch of zoological science applied for searching mineral deposits beneath the earth’s surface by mining and excavation.

Mining involves excavating or digging in mines to obtain minerals, metals, etc.

General restrictions on undertaking prospecting and mining operations

Chapter ll of the Mines and Minerals (Development and Regulation) Act 1957 mentions the restrictions on undertaking prospecting and mining operations.

These restrictions are:-

• Prospecting and mining operations should be under lease:

  The provision is mentioned under section 4 of the Act, which states that a person cannot undertake any reconnaissance, mining or prospecting operations in any area contrary to the terms and conditions of the reconnaissance permit, prospecting license or a mining lease granted under the act.

  This section also states that no person is authorised to store or transport any minerals or attempt to do the same in contradiction of the provisions of this act.

  The central and state governments are authorised to terminate these licenses and leases in the public and environmental interest and safety and regulate the mines and minerals (development and regulation) under section 4A of the act.

  If a holder of a mining lease does not undertake a mining operation for two years from the date of the lease’s execution, then the lease will lapse on the expiry of that period.

• Restrictions on the grant of prospecting licences and mining leases

  According to section 5 of the act, a prospecting licence and mining lease can be granted to a person if he is a citizen of India or a company defined under section 2(20) of the companies act 2013.

  The state government can grant the mining lease if it is satisfied with the evidence of mineral contents in the area for which application is made and a mining plan duly approved by the central or state government.

• Restrictions on the maximum area for which a prospecting licence or lease may be granted

  According to section 6 of the act, a person is not authorised:

  • To hold one or more prospecting licences covering a total area of more than twenty-five square kilometres.
  • To hold one or more reconnaissance permits covering a total area of ten thousand square kilometres.
  • To hold one or more mining leases for covering a total area of more than ten square kilometres.
  • To hold reconnaissance permit, mining lease or prospecting licence concerning any area which is not compact or contiguous.

  A person acquiring such permit, licence or lease in another person’s name for his use gets deemed to acquire it for himself.

• Restriction of periods for which prospecting licences may be granted or renewed

  The reconnaissance permit or prospecting licences can only be granted three years, but the state government can extend this for five years as per section 7 of the act.

• Restriction of the period for which mining lease can be granted or renewed

  According to section 8 of the act, the mining lease can be granted to a person for a minimum period, not less than 20 years and a maximum period of 30 years.

  These mining leases can get renewed with the prior approval of the central government for not more than 20 years.

  Section 8A inserted by the mines and minerals (development and regulation) amendment act 2015 specifies the period of mining lease for minerals other than coal, lignite and atomic minerals.

  It states that all mining leases granted before and from the date of commencement of this act should get deemed to be granted for fifty years.

• Restrictions concerning royalties on mining leaseholders

  The holder of a mining lease is obliged to pay any royalties concerning the minerals removed or consumed from the leased area by the holder himself, his agent or sub-lessee.

  This provision applies to all the holders of a mining lease before and after the commencement of this act.

  A leaseholder is not obliged to pay any royalty concerning the consumption of a mineral by a workman not exceeding one-third of a tonne per month.

  Section 9A specifies that a mining leaseholder must pay dead rent to the state government.

  Section 9B specifies the establishment of a district mineral foundation to work for the benefit of interest and persons’ benefit and areas affected by mining-related operations.

  Section 9C specifies the establishment of a national mineral exploration trust for utilising the funds accrued to the trust for regional and detailed exploration.

Rules for regulating the grant of prospecting licences and mining leases

Some rules regulate the grant of prospecting licences and mining leases. These rules are mentioned under chapter IV of the act from sections 13 to 16. These are:-

Section 13

The Central Government has the power to make rules regarding minerals

Under the mines and minerals (development and regulation) act, the central government gets entrusted with making rules regarding the grant of reconnaissance permits, mining leases and prospecting licences.

These rules can be regarding:

• The person who makes applications regarding the permits, licences and leases concerning the area regarding the land in which the minerals vests and the fees to get paid for the same
• The time limit for sending a receipt’s acknowledgement of any such application and the format in which it must be submitted
• The issues to be examined for which applications for the same land get received on the same day
• The terms and circumstances of a competitive bidding auction for the selection of the firm under Section 11A
• The power to issue reconnaissance permits, prospecting licences, or mining leases regarding the territory where the minerals are vested
• The procedure for obtaining a reconnaissance permit, prospecting licence, or mining lease in respect of an area where the government did not hold the minerals
• The terms and conditions under which such permits, licences, or leases are granted or renewed
• The terms and circumstances under which permits, licences and leases may be given or renewed
• The facilities are to be provided by mining leaseholders to people delegated by the government to conduct mining-related research or training.
• The time and manner in which the dead rent or royalty should get collected
• The time and manner of collection of fees for reconnaissance permits, prospecting licences, or mining leases surface rent, security deposit, penalties, and other fees or charges
• Payment of compensation to protect the rights of third parties from being infringed as a result of any reconnaissance, prospecting, or mining operations
• The method and circumstances under a reconnaissance, permission, prospecting licence or mining lease may get transferred
• Building, maintaining and making use of roads, power transmission lines, tramways, railways, aerial ropeways, and pipelines for mining purposes on any of the lands covered by mining leases
• The form of the registers to get maintained under this act
• Disclosure of information and reports required of holders of reconnaissance permits or prospecting licences as well as the authorities to whom they must be delivered
• The period within which application for revision of an order of state government must get submitted and the manner for its disposal.

Section 13A

The Central Government can enact rules for issuing prospecting licences or mining leases concerning territorial waters or continental shelf.

Under the mines and minerals (development and regulation) act, the Central Government is authorised to create regulations for the issue of prospecting licences or mining leases regarding any minerals beneath the ocean, within India’s territorial seas or continental shelf.

Regardless of the above, such rules may address all or any of the following:

• The criteria, limits, and restrictions that may get imposed on the granting of prospecting licences or mining leases
• The controls of mineral exploration and exploitation inside India’s territorial waters or continental shelf;
• Ensuring any such exploration or exploitation does not obstruct navigation
• Any other necessary thing to get prescribed.

Section 14

According to section 14, the provisions mentioned in Sections 5 to 13 (inclusive) do not apply to minor minerals.

Minor minerals for quarrying, mining, or other mineral concessions are not subject to sections 5-13(inclusive).

Section 15

State governments have the authority to enact rules governing minor minerals.

The State Government is authorised to enact rules regulations for grant quarry leases, mining leases, or other mineral concessions regarding minor minerals by notifying them in the Official Gazette.

Section 15A

The State Government has the authority to collect funds for the District Mineral Foundation concerning minor minerals.

The State Government may require all holders of small mineral concessions to pay sums to the district’s District Mineral Foundation, where the mining activities get carried out.

SECTION 16

Power of the government to alter mining leases granted before October 25, 1949

As per the mines and minerals (development and regulation) act, if mining leases granted before the mines and minerals (development and regulation) amendment act 1972 commencement, remains in force at the date of commencement of mines and minerals (development and regulation) amendment 1994, then it should be brought per the provisions of 1994 act within two years of such commencement.

The rights granted by the estate’s proprietor under a mining lease on or after 25th October 1949 and before the commencement of the MMDR act, 1972, such mining lease shall be brought into conformity with the provisions of the act, 1994 within two years from the date of Act’s commencement.

Provided that such leases are to be provided to acquire estates, tenures or agrarian reform.

If any action is taken under clauses (a) and (b) of this section to bring a lease into compliance with the act’s provision and rules, the period of such lease shall continue to operate for two years from the date of bringing such lease in conformity with the Act’s provision.

Special powers of Central Government to undertake prospecting or mining operations in certain lands

Section 17

Special powers of Central Government to undertake prospecting or mining operations in certain lands

This section’ provisions shall apply to land in which the minerals vest in the Government of a State or any other person.

The Central Government can initiate reconnaissance, prospecting, or mining operations after consultation with the State Government in any area not already held for such purpose by notification in the Official Gazette.

The central government is authorised to:-

• define the borders of such areas.
• Specify whether reconnaissance, prospecting, or mining operations should get conducted in an area or not
• indicate the material or minerals which will get subjected to such processes.

If the central government undertakes reconnaissance, prospecting, or mining activities in any area, the Central Government is liable to pay reconnaissance permit fee or prospecting fee, royalty, surface rent, or dead rent at the same rate if a private party undertook such activities under this Act.

Section 17A

Reservation of areas for purposes of conservation

If a territory is not reserved for prospecting licence or mining lease for protecting any mineral and if the central government wishes to do so, it may describe the boundaries of such an area after consultation with the state government.

In consultation with the state governments, the central government may designate any territory not covered by a prospecting licence or mining lease as a place of prospecting or mining by Government enterprises or corporations owned or controlled by it.

With the central government’s consent, the state government may reserve any area not currently held under any prospecting licence or mining lease for prospecting or mining activities via a Government firm or corporation owned or controlled by it.

Where the central or the state government reserves any territory under subsection (1A) or (2), the state government will award prospecting licences or mining leases concerning such area.

The partner of a joint venture should be chosen through a competitive process if:

• the government company is willing to carry out prospecting or mining operations in a joint venture with other persons, and such government company or
• the government must hold more than 74% of the paid-up share capital in joint ventures.

Conclusion

The Mines and Minerals (Development and Regulation) Act of 1957 got enacted to address prospective employment in the mining sector and the safety and advancement of mine workers.

The statute prohibits superfluous and manipulative labour among the poor and provides them with the essential platform to get heard in the event of injustice. As a result, such comprehensive legislation is required to advance the country’s economy and reform the less privileged people.

The mining sector gets projected to generate a revenue of around 878 billion in 2023. Still, it faces some challenges to carry on these activities considering the conservation of resources and sustainable development.