National Mineral Policy 2006 - Department of Mines
National Mineral Policy 2006 - Department of Mines National Mineral Policy 2006 - Department of Mines
subject to overt and covert restrictions on interstate movement. Fragmentation of the singleeconomic space within the country could lead to misallocation of resources.5.6 The arguments of both the mineral-rich states and the mining industry and states thatare not mineral-rich undeniably have some logic from the economic and socio-economicperspectives. In the interest of the development of India’s mining sector, it is necessary toresolve this debate to the maximum possible satisfaction of all sides or, if possible, on thebasis of Pareto optimality. A policy of value addition within the state in which the mineral isextracted can potentially bottle up altogether economic activities in relation to the mineraldeposits. If a downstream industry is not viable at a particular location such a policy couldresult in a situation in which there is neither downstream industry nor mining activity. Thiswould not only deprive the country of the benefits that can flow from resource exploitationfor industry and trade but would also deprive the state of the benefits that a large miningproject can bring. These include employment benefits, tertiary sector spin-offs, infrastructuredevelopment, etc. It is better for the mineral-rich state to get mining activities going andanother more suitable state to get the industry rather than neither getting anything at all.5.7 On the other hand, if it is possible to get both industry and mine within a state withoutsacrificing the economic viability of the latter there is no reason why the applicant should notbe offered inter se preference vis-à-vis projects of stand alone miners. Minerals belong to thestate, and as long as there is no wastage of resources or elements of hidden subsidisation,value addition within the state should be welcomed. The caveat here is that the best judge ofeconomic viability is the market and not the state. It would not make sense for the state tohold back an application for LAPL/PL or ML simply because none of those interested inmining are interested in putting up a downstream unit. However, if there are multipleapplicants for a LAPL/PL or ML for a particular ore body in the public domain thenpreference may be legitimately given to the applicant whose mining operations will also leadto a downstream unit that uses the mineral from that mine coming up in the state itself.5.8 The procedures for obtaining PLs or MLs in respect of land in which the minerals vestin the government, as laid down in Section 11 of the MMDR Act, contain some ambiguitiesthat enable state governments generally to hold back applications for RP, PL, and ML that donot envisage the establishment of downstream units. Section 11(1) provides that where a RPor PL has been granted for any land, the holder shall have a preferential right to a PL or ML,114
as the case may be, over any other person, provided the state government is satisfied that thepermit holder or licensee has undertaken reconnaissance or prospecting operations toestablish mineral resources in the land and has fulfilled certain other conditions. There is noprovision specifying the conditions that must be fulfilled for grant of RP and PL initially. Insituations in which no notification has been made, Section 11(2) stipulates grant of RP, PL, orML on a first-come-first-served basis. At the same time, it envisages that upon the issuanceof a notification the applications received earlier but not disposed off would be consideredtogether with the applications that are received in response to the notification. Section 11(3)lists out four criteria that should be taken into consideration for grant of RP, PL, or ML in theevent of multiple applications, viz. knowledge or experience, financial resources, technicalcompetence of staff, and the proposed investment in the mine and in the industry based on theminerals. It is apparent that it is not only legitimate, but also necessary, for state governmentsto apply the first three criteria also in situations in which there are single applications for RP,PL, or ML.5.9 The ambiguities pointed out above have been somewhat deepened by the insertion inthe MCR of two Rules—Rule 27(3) and Rule 35—in January 2000. The new additions in theMCR are quoted below:27(3) The State Government may, either with the previous approval of the Central Government or atthe instance of the Central Government, impose such further conditions as may be necessary in theinterests of mineral development, including development of atomic minerals.[35. Preferential rights of certain persons: – Where two or more persons have applied for areconnaissance permit or a prospecting licence or a mining lease in respect of the same land, the StateGovernment shall, for the purpose of sub-section (2) of Section 11, consider, besides the mattersmentioned in clauses (a) to (d) of sub-section (3) of Section 11, the end use of the mineral by theapplicant.]While Section 11(3) lists investment in industry based on the mineral as one among severalfactors to be considered while selecting one from multiple applications, Rule 27(3) appears toallow the imposition of any conditionality, including the condition of value addition, not onlyin respect of applications received pursuant to notifications but also when no suchnotification has been issued and the applications have to be decided on a first-come-firstservedbasis. Rule 35 also gives scope to the state governments to argue that the language(particularly the use of the words ‘shall consider’) enables them to give overriding115
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as the case may be, over any other person, provided the state government is satisfied that thepermit holder or licensee has undertaken reconnaissance or prospecting operations toestablish mineral resources in the land and has fulfilled certain other conditions. There is noprovision specifying the conditions that must be fulfilled for grant <strong>of</strong> RP and PL initially. Insituations in which no notification has been made, Section 11(2) stipulates grant <strong>of</strong> RP, PL, orML on a first-come-first-served basis. At the same time, it envisages that upon the issuance<strong>of</strong> a notification the applications received earlier but not disposed <strong>of</strong>f would be consideredtogether with the applications that are received in response to the notification. Section 11(3)lists out four criteria that should be taken into consideration for grant <strong>of</strong> RP, PL, or ML in theevent <strong>of</strong> multiple applications, viz. knowledge or experience, financial resources, technicalcompetence <strong>of</strong> staff, and the proposed investment in the mine and in the industry based on theminerals. It is apparent that it is not only legitimate, but also necessary, for state governmentsto apply the first three criteria also in situations in which there are single applications for RP,PL, or ML.5.9 The ambiguities pointed out above have been somewhat deepened by the insertion inthe MCR <strong>of</strong> two Rules—Rule 27(3) and Rule 35—in January 2000. The new additions in theMCR are quoted below:27(3) The State Government may, either with the previous approval <strong>of</strong> the Central Government or atthe instance <strong>of</strong> the Central Government, impose such further conditions as may be necessary in theinterests <strong>of</strong> mineral development, including development <strong>of</strong> atomic minerals.[35. Preferential rights <strong>of</strong> certain persons: – Where two or more persons have applied for areconnaissance permit or a prospecting licence or a mining lease in respect <strong>of</strong> the same land, the StateGovernment shall, for the purpose <strong>of</strong> sub-section (2) <strong>of</strong> Section 11, consider, besides the mattersmentioned in clauses (a) to (d) <strong>of</strong> sub-section (3) <strong>of</strong> Section 11, the end use <strong>of</strong> the mineral by theapplicant.]While Section 11(3) lists investment in industry based on the mineral as one among severalfactors to be considered while selecting one from multiple applications, Rule 27(3) appears toallow the imposition <strong>of</strong> any conditionality, including the condition <strong>of</strong> value addition, not onlyin respect <strong>of</strong> applications received pursuant to notifications but also when no suchnotification has been issued and the applications have to be decided on a first-come-firstservedbasis. Rule 35 also gives scope to the state governments to argue that the language(particularly the use <strong>of</strong> the words ‘shall consider’) enables them to give overriding115