The Mines and Minerals (Development and Regulation) Amendment Act, 2016 (2016 Amendment) received Presidential assent on 6 May 2016. The 2016 Amendment brings about 2 significant changes:

“Leased area” defined: The 2016 Amendment seeks to conclusively address an ambiguity in the Mines & Minerals (Development and Regulation) Act, 1957 (Act), which became subject of the Supreme Court’s judgment in the case of Samaj Parivartana Samudaya & Ors v State of Karnataka & Ors (Karnataka Case) and subsequently in the case of Goa Foundation v Union of India & Ors (Goa Foundation Case). One of the effects of the amendment is that holders of mining leases are entitled to dump mining waste or rejects from the mine in adjacent areas even if such areas may not fall within the area covered by the mining lease, subject of course to the necessary environmental, forest and other clearances. Further, it appears that such dumping may not attract the requirement to pay royalty. This is significant since holders of mining lease will now be able to fully exploit the area leased to them by conducting activities to win minerals from the entire area covered under the lease.

The amendment is significant in that it seeks to address industry concerns which had arisen as a result of the Supreme Court’s decisions in the Karnataka Case and the Goa Foundation Case. In the Goa Foundation Case, the Supreme Court, among other things, had held that the lessee cannot dump mining reject or waste outside the ‘leased area’ specified in the mining lease, unless the mining lease specifically allowed it. In the Karnataka Case, the Supreme Court had held that dumping mining waste was included in the term ‘mining operations’ and therefore such activity could take place outside the ‘leased area’.

Transfer of mining leases: Section 12A of the Act allowed the transfer of mineral concessions only for such concessions which had been granted through auction. While the Act already provided for transfer of mining leases, the 2016 Amendment provides that captive mining leases where the entire quantity of mineral extracted is used in the manufacturing unit owned by the lessee and which were granted otherwise than through auction, would be transferable with prior State Government approval on such terms and conditions and payment of ‘transfer charges’ as may be prescribed by the Central Government. The quantum of these transfer charges or a formula for their calculation is awaited. It will of course be noted that section 12A of the Act, which was inserted by an amendment to the Act in 2015, is not applicable to coal, lignite and atomic minerals. Also, while the State Government of Odisha appears to have clearly taken a position that transfer of shares of the company holding the mining lease will tantamount to transfer of the mining lease itself, the issue still remains unresolved in the larger context.

Comment

The efforts of the Central Government in making these amendments are laudable inasmuch as they seek to bring about clarity in some of the most relevant operational aspects relating to mining and its allied industries. It is hoped that larger structural changes can be achieved through many more such seemingly minor precise surgical changes, which go a long way in unclogging the mining and its allied industries.