Mining better

Print edition : August 01, 2008

THE STATION FOR automatic filling and refilling of special-grade alumina in Nalco's Damanjodi plant.-ASHOKE CHAKRABARTY

The new draft National Mineral Policy envisages a revitalised mining sector.

THERE has been a crying need in Indias mining sector for more investment, better technology, better governance and better grievance-redress mechanism, for quite some time now. Though the country is one of the most mineral-rich in the world, the sector has been languishing because of several constricting factors that the proposed National Mineral Policy will hopefully address. The policy, which was approved by the Cabinet on March 13, has been tabled in Parliament and is likely to be adopted in the monsoon session with certain amendments. Once that happens, Indias mining sector will be all set for a great leap forward. If the projections are to be believed, revenue from the sector is bound to increase at least threefold from the present Rs.18,000- 20,000 crore. Foreign direct investment (FDI), projections say, could be as high as $250 million.

The National Mineral Policy is expected to usher in an era of unfettered exploration of the countrys mineral resources and provide employment to over five lakh skilled and unskilled people by the end of 2011. Amendments to the Mines and Minerals (Development & Regulation) Act, 1957, the Mineral Concession Rules, 1960, and the Mineral Conservation and Development Rules, 1988, which at present govern all aspects of mining in India, are expected in the forthcoming session of Parliament.

The new policy has suggested measures such as seamless transition, transferability of mineral concessions and transparency in the allotment of concessions to reduce delays and discretionary powers, which are seen as impediments to investment and technology flows in the mining sector. The policy also seeks to develop a sustainable framework that will enable optimum utilisation of mineral resources for industrial growth and improve the quality of life of the people living in mining areas, which are usually located in backward and tribal areas.

The new policy seeks to ensure a seamless transition from regional exploration to prospecting and to mining, except for reasons of national security or some other specified public purpose. It also calls for the unbundling of prospecting from mining, whereby a prospector may invest in, and sell, data. It aims to encourage competitive exploration with state-of-the-art technology and investment with the introduction of two new concessions, non-exclusive reconnaissance operations (NERP) and Large Area Prospecting Licence (LAPL).

The policy seeks to introduce competition and a level playing field by ensuring that the two roles of the government, as a regulator and as a miner, are dissociated from each other. It also seeks to promote the auction of ore bodies fully prospected at public expense by public sector companies so that the government recovers the cost of exploration and revenues are generated for the state. State governments will be allowed to give preference to a value adder in case of multiple applicants for a concession, subject to other eligibility requirements.

At the same time, the government wants to reduce delays in the grant of mineral concessions, and State governments cannot hold back the grant of mineral concession if no value adder is available.

The policy aims to promote the welfare of the communities living in mining areas by introducing a sustainable development framework, based on the model of the International Council on Mining and Metals (ICMM). This will involve compensatory afforestation and resettlement and rehabilitation packages. Funds from mining companies will be routed to beneficiary projects with local participation and support from non-governmental groups. Mining companies will have to spend a percentage of their profits on social infrastructure and grant stakeholder rights to project-affected people. The draft National Mineral Policy has also proposed the introduction of ad valorem royalty system for minerals and an increase in dead rent to discourage idle holding of resources. Illegal mining will draw increased penalty.

These policy initiatives are expected to create a level playing field free of the caprices of vested interests. The new draft policy seeks to remove the scope for manipulation and manoeuvring that was present in the old policy.

J.P. Singh, who retired as Secretary, Mines, on June 30, said: The new policy makes the dispensation more transparent, allows a level playing field to all and tries to inject an atmosphere of confidence among investors by ensuring them security of tenure, and an objective and autonomous grievance-redress mechanism in the form of the Mining Administrative Appellate Tribunal. The tribunal will be an autonomous body, to be headed by a retired Supreme Court judge or an expert from the mining sector.

But before this policy comes into effect, the Centre will have to address the concerns voiced by five mineral-rich States Madhya Pradesh, Chhattisgarh, Rajasthan, Orissa and Jharkhand.

In a joint memorandum to the Prime Minister, the States said that the clause of value addition was not given enough attention.

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