Great days ahead

V.V. KRISHNAN

Interview with J.P. Singh, Secretary, Mining.

IN an interview given before he retired as Secretary, Mines, on June 30, J.P. Singh explains why there was a need for a new mineral policy to replace the policy adopted in 1993.

Attracting foreign direct investment seems to be a major thrust area in the new National Mineral Policy. But there has been a policy in place since 1993, which also had provisions for 100 per cent FDI. So why was a new policy necessary?

True, the country has had a mineral policy since 1993, but that was not proving to be effective enough. Even though there was provision for 100 per cent FDI, investors were not forthcoming because there was no security of tenure, no transition from reconnaissance to exploration to mining, no transparency in how mining licences were granted. The time taken in the processes were long and there was no independent, objective grievance-redress mechanism. The entire mining activity so far was concentrated on bulk minerals like iron ore, bauxite, limestone, and so on, whereas high-value minerals like gold, diamond, nickel and atomic minerals were neglected. The irony of the situation is that despite having huge reserves of gold and diamond, our import cost for gold and diamond is over $20 billion per annum. The mining sector desperately needs investment, better updated technology and better governance. All these will be addressed in the new policy.

Could you elaborate on the factors that prevented FDI or other private sector investment in high-value mining activity?

The concept of a preference clause for granting mining licences was an obstacle because there was a great amount of discretion, which led to a lot of litigation. There was no transparency. Apparently, those applicants who promised value addition within the State had the first preference, but there was at times no clarity on that. Besides, the company doing the reconnaissance work was not sure whether it would be given the exploration or mining rights. The factor of discretion dissuaded investors. Now we are assuring transition from reconnaissance to exploration to mining.

Besides, it is highly unlikely that companies, in this age of specialisation, will provide end-to-end solutions: so we have also provided for transfer of concessions. Say, a company doing reconnaissance is not interested in exploration or mining under the new policy, it can sell its rights to another company. Of course, with the States approval and after paying a fee to the State. We have also provided for non-exclusivity of reconnaissance rights, which means many applicants can undertake reconnaissance at the same time and the first company to succeed gets the exploration and mining rights.

But some mineral-rich States are objecting to the new policy. They say it compromises their right to select the company and allows the Centre to usurp their powers.

Their fears are misplaced because they do get to select the company in any case. The Centre is actually giving up its own right and power by setting up the Mining Administrative Appellate Tribunal, which will be an autonomous institution for grievance redress.

The States are also objecting to the fact that value addition no longer remains the criterion for granting mining rights.

This fear is also unfounded because value addition is a criterion even now. Only in cases where there are no applicants for value addition will stand-alone mining be allowed. Besides, companies will be required to earmark a part of their profits for infrastructure development in the mining area as part of their corporate social responsibility.

How will the new policy address problems of environmental degradation and displacement of people?

For the first time ever, we are insisting on levying charges for proper mine-closure activities. Either the mining companies do it themselves, by restoring the area once mining is complete or the government will do it by levying charges. The rules in this regard will be much more stringent and upfront. As for rehabilitation and displacement, we insist on a stakeholder policy: the company offers a stake to affected people.