Last week, Sitharaman announced a plan to auction as many as 500 mineral blocks over an unspecified period, but given the pace at which even the auctioned blocks are operating, the sector 's investment landscape does not look too soon to improve.
Finance Minister Nirmala Sitharaman announced last week a plan to auction as many as 500 mineral blocks over an unspecified period, but given the pace at which even the auctioned blocks will become operational, the sector 's investment landscape does not look too soon to improve.
Mining of non-coal minerals has been made more attractive to investors in recent years with several steps, such as licensing certainty and a single license across the mining value chain (from prospecting to production), but an investor still needs to obtain as many as 30 approvals to start mining. Worse, the most important environmental and forest clearances take on average 270 days and 570 days respectively. No wonder, since the amendment to the Mines and Minerals Development and Regulation (MMDR) Act in 2015 aimed at facilitating investment procedures, only 12 new non-coal mineral mining blocks such as iron ore, limestone and bauxite have been operationalised.The low number of new operating leases is despite the fact that 95 such assets have been auctioned since the 2015 amendments, which were designed to increase the transparency and efficiency of the leasing and regulation process.
The Mineral Laws (Amendment ) Act, 2020, passed on 12 March, allowed new owners of the commercial mines, where the lease period expired in March 2020 (the auction was allowed even before the lease period expired), to carry on mining activities for a period of two years from the date of the grant of the new lease, without acquiring fresh environment and forest clearance.The tenants of the lease may also apply for a new license for a term of more than two years. Obviously, the purpose of this leniency was to speed up investment and boost production.
Of the 95 blocks auctioned after the 2015 amendment to the MMDR Act, 19 belonged to this category; sources said that, after making the necessary payments, those mines will start production immediately.
Apart from the sticky regulatory issues and the time-consuming delays associated with granting environmental and forestry clearances, the magnitude of taxes and levies continues to irritate investors in non-coal mining, where India 's performance is far below potential, making it vulnerable to huge import bills. Indian levies, on average, are around 40-45 per cent (without corporate tax included) compared to 5-14 per cent worldwide.
“It practically takes two-three years to get all the approvals. We would have been happier had the government allowed de-facto approvals of these clearances and allowed us to start mining immediately after granting leases to us,” said a Karnataka-based miner, on condition of anonymity.
Investors in the mining sector have also been hindered by end-use restrictions. The condition for at least three bidders also hinders the leasing process, even in cases where there is an investor interest. In January of this year, the Center released an Ordinance to make hundreds of captive coal mines open without any end-use restrictions.Domestic and foreign steel, aluminum or copper producers and also local power companies can now take part in the auctions to be held to reallocate the captive blocks canceled by the Supreme Court in 2014. To date, only 90 of the 204 blocks canceled by the apex court have been reallocated — including 60 assigned to PSUs on a nomination basis and 29 auctioned off — and only 29 of them are operational.
Vedanta Leader Anil Agarwal has pointed out in the past that only 10% of India's mining potential area has been explored, compared to 95% for Australia. In reality, Agarwal believes that a sensible mining policy will cut mineral imports by half and create 20 million jobs.
