Home Coal Update Law passed in Parliament to open coal sector for commercial mining

Law passed in Parliament to open coal sector for commercial mining

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Parliament passed a bill on Thursday to remove end-use restrictions on participation in coal mining auctions and to fully open up the coal industry to commercial mining by domestic and global companies. 

The Mineral Laws (Amendment) Bill was passed in Rajya Sabha, with 83 members voting for it and 12 against it. 

The Lok Sabha passed the bill on March 6. 

Responding to a brief discussion of the bill, Coal Minister Pralhad Joshi said the legislation would help bring more FDI to the coal and mining sector and boost the economy.

The Minister said the bill was important because India should use its own natural reserves instead of importing Rs 2.7 lakh crore coal. 

“We have to produce coal and reduce imports,” he said, adding more domestic output would lead to more electricity generation and lower oil import bills. 

The Minister also assured the Members that the government would strengthen the state-owned Coal India Ltd (CIL).

“CIL will be strengthened. I have already given it a target to produce 1 billion tonne by 2023-24…There will be no problem in CIL,” Joshi said.

According to the minister, the legislation will bring a “sea change” in the sector.

Joshi said the stress should be on the exploitation of reserves without harming the environment. 

He said India has one of the largest coal reserves in the world, and if it is not mined, it would turn into “mud.” 

In a statement, the Ministry of Coal said the Parliament passed the “Mineral Laws ( Amendment) Bill 2020 on amendments to the Mines & Minerals (Development and Regulation) Act 1957 and the Coal Mines (Special Provisions) Act 2015” 

The Mineral Laws (Amendment ) Bill 2020 will open a new era in the Indian coal and mining sector in order to promote ease of business, the statement said.

The Bill will transform the mining sector in the country, boost coal production and reduce dependence on imports, Joshi said. 

The amended provisions clearly provide that companies which do not have prior experience in coal mining in India or have experience in mining in other minerals or in other countries may participate in the auction of coal / lignite blocks. 

This will not only increase the participation in coal / linenite block auctions, but will also facilitate the implementation of FDI policies in the coal sector, according to the statement. 

Now, companies that are not ‘committed to specified end-use’ may also participate in coal mining auctions.

Removing the end-use restriction would make it possible to participate more widely in the 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 Centre. 

The bill also allows for the prospecting license-cum-mining lease (PL-cum-ML) for coal / lignite, which increases the availability of coal and lignite blocks, and for the allocation of coal blocks of varying grades in a wide geographical distribution, it said. 

Successful bidders / allotes have now been entitled to use the coal mined in any of their plants or plants belonging to their subsidiary or holding company.

The amendments also provide for the allocation of the coal mine to the next successful bidder or allottee, following the termination of its allocation, along with matters incidental to it. 

A provision has also been made for the appointment of a designated custodian for the management of mines, with the exception of Schedule II of the mines which have been produced and whose disposal / allocation order has been cancelled. 

With the modification, environmental and forest clearances, along with other approvals and clearances, shall automatically be transferred to the new owners of the mineral blocks for a period of two years from the date of the grant of the new lease.

This will allow new owners to continue their trouble-free mining operations. They may apply for a new license for a period of more than two years. 

The auction of the lease of the mines can now be started before the lease term expires. It will enable the state government to take advance action to auction the mineral blocks so that the new tenant could decide before the existing lease expires. This will contribute to the seamless production of minerals in the country.

“The new provisions will also augment the exploration of the deep seated minerals and minerals of national interest by allowing Non Exclusive Reconnaissance Permit (NERP) holders to apply for composite licence or Mining Lease (PL-cum-ML).Various repetitive and redundant provisions of MMDR Act and CMSP Act have also been omitted for ease of doing business,” it said.

The bill replaces the ordinance amending the MMDR Act 1957 and the CMSP Act, which was enacted on 11 January 2020. 

The Order, which was cleared by the Cabinet in January, introduced amendments to the Mines and Minerals (Development and Regulation) Act, 1957, and to the Coal Mines (Special Provisions) Act , 2015. 

Twelve Members of Parliament from different parties expressed their views on the bill earlier. 

The House saw the division of votes on the bill after Elamaram Kareem of the CPI (M) had pressed for it.