Govt promulgates ordinance for amendment in laws to ease auction of coal mines

PTI, Jan 12, 2020, 10:45 AM IST

New Delhi: The government on Saturday announced promulgation of the ordinance for amendment in the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015, aimed at opening up the coal sector completely for commercial mining for local as well as global firms.

The Union Cabinet had earlier approved the amendments intending to open up new areas of growth in the coal and mining sector.

The amendments in the acts would enhance the ease of doing business, the democratisation of coal mining sector by opening it up to anyone willing to invest.

The move will also offer unexplored and partially explored coal blocks for mining through prospecting license-cum-mining Lease (PL- cum-ML), promote foreign direct investment in the coal mining sector by removing the restriction and eligibility criteria for participation.

It will also allow successful bidder/allottee to utilise mined coal in any of the plants of its subsidiary or holding company and attract large investment in the coal mining sector, the coal ministry said in a statement.

Earlier, there was no provision for grant of composite prospecting licence-cum-mining lease (PL-cum-ML) in respect of coal/lignite. A coal/lignite block could be either be allocated for PL or for ML. The amendment has enabled the allocation of coal blocks for composite prospecting licence-cum-mining lease (PL-cum-ML) which will help in increasing the inventory of coal/ lignite blocks for allocation.

Coal blocks with different grades and in a wide geographical distribution will now be available for allocation.

Elaborating on the amendments, the ministry further said there was lack of clarity earlier in the language of the provisions in the acts leading to a restrictive interpretation of the eligibility conditions in the auction.

It has now been clarified that any company selected through auction/ allotment can carry on coal mining operation for own consumption, sale or for any other purposes, as may be specified by the Centre allowing wider participation and competition in the auction.

Thus, the companies which do not possess any prior coal mining experience in India but are financially strong and or have mining experience in other minerals or in other countries can now participate in an auction of coal/lignite blocks.

This would also allow the implementation of the 100 per cent FDI through automatic route for sale of coal.

“Hitherto, the Schedule II and III coal mines could only be auctioned to companies that are engaged in specified end-use. Now, the omission of sub-section (3) of Section 4 of CMSP Act has provided flexibility to the Central Govt. in deciding the end-use of Schedule II and III coal mines under the CMSP Act,” it said.

“This would allow wider participation in auction of….coal mines, for a variety of purposes such as own consumption, sale or for any other purpose, as may be specified by the central government,” the ministry said.

The Coal Mines (Special Provisions) Act (CMSP Act) and the CMSP Rules were silent on the subsequent allocation of coal mines upon the termination of allocations made under the Act as well as rights and liabilities of the allottee, whose allocation has been terminated.

Earlier, there was no provision for appointment of designated custodian for management of the mines under production whose vesting/ allotment order has been cancelled.

The objective of the amendment is to ensure the continuity of production of minerals.

With the amendment, it has also been clarified that state government can take up advance steps for auction of blocks before the expiry of the lease period.

This would ensure that the production of the minerals from such blocks can be seamlessly continued.

The working mining leases of Odisha are expiring in 2020. These leases produced about 58 million tonnes (MT) of iron ore, 1.80 MT of chromite and 0.77 million tonnes of manganese during the year 2018-19.

Statutory clearances required to start the mining operations for the new leases have to be granted expeditiously to enable the new lessees to continue the mining operations.