National Mineral Policy 2006 - Department of Mines

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In reviewing the MMDR Act, it is necessary to recapitulate the areas of concern raised byboth domestic and international companies operating in India in their presentations before theCommittee. These concerns are examined in the following paragraphs under various heads.The recommendations that follow should be treated as subject to the exceptions mentioned inChapter 5 and the section on ‘Allocation of Captive Mines to Steel Makers’ in Chapter 7.Exploration Licences1.38 The MMDR Act provides for a two-tier exploration licence system, viz. RP and PL.Section 3(h) of the Act defines ‘Reconnaissance operations’ as:any operations undertaken for preliminary prospecting of a mineral through regional, aerial, geophysical orgeochemical surveys and geological mapping, but does not include pitting, trenching, drilling (exceptdrilling of boreholes on a grid specified from time to time by the Central Government) or subsurfaceexcavation;…Section 3(ha) of the Act defines ‘Prospecting operations’ asany operations undertaken for the purpose of exploring, locating or proving mineral deposits;1.39 While the two-tier system of RP and PL is well recognised in modern explorationpractices the world over, it was represented to the Committee that the approach in India toreconnaissance is now inadequate and out of date. The primary intent of reconnaissanceoperations (or regional exploration) is to identify areas in which ore bodies occur rather thanto actually locate and delineate ore bodies. The latter falls in the realm of detailed explorationor prospecting. The purpose of RPs is to cover as wide an area by the activities mentioned inSection 3(ha) of the Act. Therefore, in the first instance, under modern mining laws RPs aregenerally non-exclusive, that is, there is no limit on the number of permits that can be issuedover the same area. Secondly, RPs do not give rise to any preferential or absolute right to aPL or ML. This non-exclusive approach allows for various parties to undertakereconnaissance over large areas so as to identify the areas for prospecting in a morecompetitive environment. Given that the first-come-first-served concept is used in grantingthe PL, the RP holder in non-exclusive cases will naturally want to be the first to identifymineral occurrences for putting in his PL application and this will introduce an element ofurgency in the RP holder’s search operations. Thirdly, when RPs are issued on a nonexclusivebasis, such RP operations are least regulated and no further obligation is imposedon the RP holder beyond submission of data of work done, while also keeping the application26
fee high enough to discourage nuisance applications. This is in order to give a fair chance toeverybody interested in locating the right areas for detailed prospecting. Finally, and mostimportantly, non-exclusive RPs restrain the tendency among exclusive RP holders to actuallycross over to detailed prospecting activity over a smaller area at the expense of regionalexploration, which is the main purpose of the RP.1.40 In the current dispensation, RPs are issued on a mutually exclusive basis with arearestrictions at the state level. While 202 RPs have been granted for an area of about 270,000sq. km since the introduction of the concept in 1999, data filed by the RP holders with GSIcovers an area of 61,765 sq. km only. There is also a huge potential for regional explorationin areas where RPs have not been applied for and where GSI has not done any work by wayof regional exploration. Out of the country’s geographical area of 3.20 million sq. km, asmuch as 1.82 million sq. km is hard rock area and potentially mineral bearing. Regionalexploration through geochemical and geophysical mapping has been completed by GSI andother government agencies for not more than 12 per cent of the land most likely to bearminerals (about 570,000 sq. km) on the basis of the geological environment. Further, thereare also areas where GSI has given up work or which have been relinquished by RP holdersunder the relinquishment requirements but in which other explorers may have interest.Therefore, in areas where no one has applied for an RP and/or which have been relinquishedby GSI or other RP holders and are not covered by any current exclusive concession, an‘open sky’ policy for granting non-exclusive RPs would be appropriate. Such a non-exclusiveRP would neither entail much regulation nor entitle the holder to any automatic right toobtain a PL. In order to provide sufficient incentive-cum-security to such non-exclusive RPholders, they have to be assured strict application of the first-in-time principle in the grant ofPL under the MMDR Act. This is the only return that they would be getting for theinvestment made by them in conducting reconnaissance operations and hence a seamlesstransition from RP to PL would be a crucial aspect of this policy. As a measure ofliberalisation, non-exclusive RPs may be granted by the states directly without prior approvalof the Centre, even in respect of Scheduled minerals. However, copies of these must be sentto IBM and the Central government to enable checking of whether the area restrictions havebeen rigorously followed or not.1.41 It was represented to the Committee that the RP should have shallow pitting,trenching, and surface drilling (excluding subsurface/underground excavations) as27
Page 2 and 3: National Mineral PolicyReport of th
Page 4 and 5: ContentsAcronyms...................
Page 6 and 7: Annexure 5: Using the GRI Guideline
Page 8 and 9: GDP gross domestic productGIS Geogr
Page 10 and 11: UNFCUSVATWCUUnited Nations Framewor
Page 12 and 13: Introduction1. The Government of In
Page 14 and 15: issues relate to fund raising by pr
Page 16 and 17: termination of MLs, lowering of cei
Page 18 and 19: • In the case of large mining ope
Page 20 and 21: investment. The work done by GSI co
Page 22 and 23: mainly for minerals of base metals
Page 24 and 25: 1.21 This situation has changed dra
Page 26 and 27: absent. A study by the United Natio
Page 28 and 29: example, a mining major may outsour
Page 30 and 31: would otherwise remain unexploited
Page 32 and 33: the policy environment must continu
Page 34 and 35: ‘A thrust is to be given to explo
Page 38 and 39: permissible activities in order to
Page 40 and 41: (i)(ii)(iii)(iv)The current two-tie
Page 42 and 43: per plan should be significantly hi
Page 44 and 45: Duration of Concessions1.48 In the
Page 46 and 47: 10,000 sq. km in a state. This has
Page 48 and 49: (ii)(iii)(iv)The maximum total area
Page 50 and 51: e obviated if the lease deed is exh
Page 52 and 53: elinquishment of areas by the lesse
Page 54 and 55: to give priority to the prior appli
Page 56 and 57: (v)(vi)(vii)Rules should be prescri
Page 58 and 59: esponsible for all rights, liabilit
Page 60 and 61: ut also the revenue generated from
Page 62 and 63: government at the Secretariat. A le
Page 64 and 65: Secretary. If the Directorate is in
Page 66 and 67: (i) All applications for mineral co
Page 68 and 69: application. A similar website shou
Page 70 and 71: concerned State Government (or othe
Page 72 and 73: Further, Rule 7D of the MCR specifi
Page 74 and 75: mission mode through, inter alia, t
Page 76 and 77: Chapter 3Forest Conservation and En
Page 78 and 79: conservation. There are trade-offs
Page 80 and 81: ICMM AND SDF3.8 The ICMM membership
Page 82 and 83: higher level. The basic approach is
Page 84 and 85: (i) To minimize displacement and to
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affected PAPs in the mining operati
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that a well-regulated and responsib
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(iii)Notwithstanding the above, sur
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egard, all ‘forest’ land must b
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Figure 3.1: Procedure for Processin
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should be authorised to grant or re
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formulation and appraisal of the EI
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3.41 Recognising the need to make t
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Figure 3.3: Public Hearing/NOC from
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Chapter 4Infrastructure Needs and F
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4.5 Logistics is the key to access
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Table 4.1: Mineral Production in In
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necessary, therefore, that in infra
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to the ports of Haldia and Paradip
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Connectivity of Major Ports, brough
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(iv)(v)(vi)(vii)At Visakhapatnam Po
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was of the opinion that while the m
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such an arrangement, the Ministry o
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developed, controlled, and run by s
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subject to overt and covert restric
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consideration to the end use of the
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(iii)parameters laid down in existi
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Chapter 6Augmenting State Revenues(
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the value addition question conside
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In a system of ad valorem rates of
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must provide revenues sufficient to
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Box 6.1: Methods of Valuation of Ro
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Another point to be borne in mind b
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ailable, cognisable criminal offenc
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e worked out. This should be string
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7.3 Considering the high-risk natur
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Table 7.2: Minimum Listing Requirem
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(ii)(iii)only. Such funds have not
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addition, the minimum post-issue fa
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and hence this ore should be conser
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miners distort the market for their
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7.22 The current law does not make
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is mostly of low grade magnetite. H
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Most magnetite findings are entirel
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in UK 206 kg, and in China it grew
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metres. The use of down hole drill
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7.42 Despite the fact that SME mini
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also be a consideration. However, t
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price, reduce profitability, and pu
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IMPACT ON DOMESTIC IRON ORE PRICES
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7.58 Export of iron ore fines on a
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POLICY ON BEACH SAND MINERALS7.64 B
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not contain more than 0.1 per cent
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7.73 On 18 January 2006, the DAE no
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with the Centre is mainly to ensure
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India enterprise) reported that the
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chloride process pigment technology
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are disposed of in the mined-out ar
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directed to ensure that the AERB/AM
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would have to be carefully drafted
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‘In coordination with the Geologi
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Exploration Licences• The current
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• The fees should be significantl
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surveys have been undertaken, the P
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automatic until the exhaustion of t
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y stating in the MMDR Act that a pr
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departmental representative for sec
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therefore (under Rule 63A), pass su
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• Section 12(1) of the MMDR Act s
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o The lessee should not be asked to
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again and the State Mines Departmen
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• As in the past, no environmenta
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oad and rail, and lack of long-term
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government to the applicants who ar
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next three-year period as well. In
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• Rates of dead rent should be ra
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measure to provide a level playing
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• In respect of three titanium be
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No-I&M-25(3)/2005Government of Indi
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No-I&M-25(3)/2005Planning Commissio
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‘Efforts would also be made to gr
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ecommending amendments to the Act a
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etained as a Prescribed Substance u
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OthersShri Arvind VarmaEx-Secretary
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16. Reserve Bank of India17. M/s Ji
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the RP holders in areas beyond 25 s
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Appendix ERecommendations of the Ex
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(1) Provide proximate and strategic
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technology to enter the Indian stee
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Cross-country Comparison of Mining
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Appendix F (cont.)Country Mining La
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Cross-country Comparison of Mining
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Appendix G (cont.)Country Mining le
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CountryAppendix H (Cont.)Environmen
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AustraliaIndonesia 9 4 Not specifie
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Annexure 1 (cont.)Geologicalenviron
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operations are undertaken over a fa
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B. After Rule 54 of the Mineral Con
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the Central Government to entertain
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applications, could exercise the ju
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We most humbly request that the abo
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Annexure 4The 2002Sustainability Re
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While unique in its coverage and pr
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• facilitate comparability• add
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AssuranceJust as investors look to
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The Guidelines are structured in fi
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There are many aspects relevant for
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- Issues in which community partici
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Annexure 7Royalty Accruals on Miner
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Sl.No.MineralAnnexure 8 (cont.)2003
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Annexure 91 THE SECOND SCHEDULE 1(S
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(v) Group V Coals:(a) Non-Coking Co
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23. Iron Ore:(i) Lumps:(a) with 65
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45. Tin Five per cent of London Met
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International Comparison of Royalty
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Production, Consumption, Exports, a
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National Mineral Policy 2006 - Department of Mines

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