Deposition before the RajyaSabha Select Committee on the Mines and Minerals
(Development and Regulation) Amendment Bill (MMDR) 2015
March 14, 2015
There is a need for an urgent amendment to the Mines and Mineral (Development and Regulation) Act (MMDR) 1957, but we would like to express and put on record our deep concern that the 2015 Amendment Act will not resolve outstanding issues in the mining sector; it will instead increase the marginalization of local people, mainly tribals and also harm the environment. We would like to submit that it therefore needs revision to incorporate these concerns.
In 2008 the Centre for Science and Environment published a detailed report on the mining sector titled: Rich lands, poor people: Is sustainable mining possible? We explained that minerals are found where forests are found; water comes from; tribals live; the poorest of India lives and local strife is increasing. We intervened to ask for a new balance for mineral extraction but keeping in mind the interests of people and environment.
We believe that the MMDR Bill 2011 made an attempt to balance these concerns. There were lacunas but it recognized the need to incorporate community interests and environmental protection. In this way there was a move ahead in MMDR 2011 from 1957.
But we believe that MMDR 2015 is one-sided. It protects the interests of miners; increases revenue for states; but does little to protect the interests of people and environment.
We also believe this will not work and this policy is shortsighted. The problems faced by the mines sector are not just about the lack of auctioning or transparency in bidding process; but because of extremely destructive and reckless mining that has created problems for local people; destroyed the environment. This has in turn led to a backlash – which has resulted in court actions in Goa, Bellary and other places. Therefore, there is a need for oversight in the operations for mining and to safeguard interests of people and the environment.
Our detailed comments on the MMDR Amendment 2015 are as follows:
The Mines and Minerals (Development and Regulation) Amendment Bill (MMDR) 2015, that has been tabled before the Parliament “seeks to amend the MMDR Act, 1957, in order to develop country’s mining sector to its full potential and to put the nation’s mineral resources to the best use for national economic growth”.
As indicated by the Ministry of Mines, the MMDR Bill, 2015, is designed to eliminate discretion in the grant of mineral concessions, bring in transparency in the allocation of mineral resources, simplify procedures and remove delays in decision-making, provide impetus to the mining sector, encourage exploration and investment, safeguard interest of affected persons and develop stronger provisions to check illegal mining. However the Bill
as structured, will do little in resolving many of these issues, rather holds the potential to create more problems in future.
1. 2. 3. 4.
We need to judge the MMDR Amendment Bill, 2015 on the basis of five key
objectives, which concern the mining sector and mineral needs of the country, the
people who are affected by mining and the environment.
Does the Bill make the local community partners in the mineral development of the
Doesthe Bill hold the promise to capture windfall profits from mining and share the
wealth of mining with the local community, the state and the nation;
Does the Bill encourage, and has the potential, to steer the mining sector to adopt
environment friendly practices;
Does the Bill promote the development of modern, scientifically advanced and
efficient mining sector to fulfill the present and the future mineral needs of the
Does the Bill put in place the regulatory and the facilitative institutions for the
transparent and accountable functioning of the mining sector.
1. Does the 2015 Bill make the local community partners in the mineral development
of the country?
The MMDR 2015 Bill fails to make communities and the institutions of local government
partners in the mining and mineral development process. None of the progressive
provisions of the MMDR Bill, 2011 have been included in the 2015 Bill. Though we were
not completely satisfied with the 2011 Bill, still the bill had many progressive provisions
for consultation and involvement of the institutions of local government. In this context
two important provisions can be referred to.
- In 2011 MMDR Bill, notification of public lands for all types of mining concessions had to be done in consultation with the gram sabha or district council in fifth and sixth schedule areas. In non-schedule areas district panchayats were required to be consulted. This was a very important provision as local people, mainly tribals do not own land in large parts of scheduled areas. Similarly, before approving the progressive and final mine closure plan, the Indian Bureau of Mines (IBM)was required to consult the local penchants on the planned land use.
- The most problematic part of the MMDR 2015 Bill is that it has denied and removed the usufruct and traditional rights of communities over their land and resources. In the MMDR 2011 Bill, all compensation, rehabilitation and resettlement had to be settled not only for persons having occupational rights over the land, but also for those having the usufruct and traditional rights. Removal of such provision will have huge implications in deciding compensation and rehabilitation and resettlement. This will lead to further alienation of tribal communities in the scheduled areas.
2. Does the 2015 Bill hold the promise to capture windfall profits from mining and
share the wealth of mining with the local community, the state and the nation?
With respect to this question, we will focus on sharing the profits of mining wealth with
In the 2011 Bill, for major minerals, the leaseholder had to pay the district mineral
foundation (DMF), an amount equivalent to the royalty paid during the financial
year annually. For coal and lignite, it was to be an amount equal to 26 per cent of the
profit after tax. We had done detailed analysis in 2011 and found that this amount
paid to the district mineral foundation would not affect profitability of companies.
The DMF was to use this fund for specific purpose,which was indicated in the 2011
These provisions have now been significantly diluted. Leaseholders are now
required to pay “not more than one-third” of the royalty for all respective minerals,
as compared to equivalent royalty or 26 per cent profit in the 2011 Bill. It is now up
to the states to decide how these funds will be used. So, not only the size of the funds
has been considerably reduced, they can now be potentially misused too. Reduction
of profit sharing provision by two-thirds means that from the idea of sharing profits,
this provision has now been reduced to a charity.
3. Does the 2015 Bill encourage, or has the potential, to steer the mining sector to
adopt environment-friendly practices?
Most mining areas in India are critically polluted areas as environment management
practices of mines are in the cradles, and our regulatory institutions have failed to push the
mining industry towards adopting better practices. There are many examples of poor
mining practices, but just one, which is with respect to mine closure, can sufficiently bring
out the extent of hazards associated with such practices.
India has the distinction of coining a term called as “orphaned mines”. These are mines
where minerals have been removed and the concerned mining company has run away
without closing and rehabilitating the mines. These orphaned mines are major causes of
pollution. In many coal-mining areas, these orphan mines are leading to leakage of highly
toxic acidand incidences of mine fire is common. In the iron ore belt, they lead to huge air
and water pollution. Over the past 20 years, regulations have been tightened to improve
the mine closure practices,such as the requirement for progressive mine closure and
provision of a financial bond to ensure that companies close the mines before they leave.
These provisions are still evolving and therefore the practice is still poor, but is slowly
The provisions of the 2015 Bill seriously jeopardize these gains.
Under the new Bill, all mining leases will now be granted for 50 years. The lease for existing
mines has also been extended to 50 years. After expiry, leases can be re-auctioned. This
creates problems at multiple levels.
From an environmental perspective, it doesn’t make sense to keep thousands of
mines opened at one point of time as every open mine is a source of pollution. This
is what the 50-year mine lease provision will do.
From an economic perspective too, it does not make sense why mines should be
given a 50-year lease period as it amounts to sitting and speculating on resources. It
makes sense to open a mine, remove all minerals quickly and progressively
rehabilitate and close the mine and return the land to the landowners.
The long lease period with subsequent re-auctioning provision will now create
incentive for leaseholders to do the opposite. They would keep the mines open and
shift the burden of rehabilitation to future generations. The long lease period will
also create difficulty in establishing appropriate financial guarantees to ensure that
mine closure will happen. This will bring back the practice of “dig and run”, adding
to India’s poor legacy of orphaned mines.
The 30-year lease period under the parent MMDR Act was itself problematic as
there was no provision for detailed periodic assessment and most mines were doing
progressive rehabilitation poorly. Only during the time of renewal some assessment
was done. Now with a flat 50-year lease period, with no provision for periodic
assessment given in the Bill, the situation will worsen.
Our assessment is that the theme of sustainable development has been downgraded in the
2015 MMDR Bill. Under the National Mineral Policy 2008, the Sustainable Development
Framework was to be an important basis for undertaking socially and environmentally
responsible mining. In the MMDR 2011 Bill there were provisions for development and
implementation of the National and State Sustainable Development Framework. These
provisions have been diluted in the MMDR 2015 Bill.
4. Does the Bill promote the development of modern, scientifically advanced and
efficient mining sector to fulfill the present and the future mineral needs of the
We represent an environmental organization, but we are also conscious of the fact that
minerals will continue to play an important role in the sustainable development pathway.
We will need minerals to meet the basic social and physical infrastructure needs of the
country. We will also need minerals for future advanced technologies, for the development
of renewable energy sector and for developing energy and resource efficient technologies.
Therefore, having a long-term vision for the sustainable future of the mining industry is
very important. The Bill, however, has more focus on short-term needs than long-term
requirements. In fact, some of the provisions of Amendment Bill 2015 might limit
innovations and investments in the sector.
Two major provisions under the 2015 Bill inflict such limitation; first, auction of all
concessions, and second, provisions on reconnaissance.
The Bill creates a blanket provision for granting all types of mineral concessions through
auctioning, including mining leases and also prospecting-cum-mining leases. Though
auctioning is a fair and transparent process, it does not give desire results in all cases.
Auctioning is the best way to allocate mineral concessions where the deposits can
be accurately established and proper valuation can be done. This will capture the
windfall profits of mining as well as bring transparency in the allocation of leases.
In cases where mineral deposit valuation cannot be done, auctioning can result in
undervaluation of minerals and subsequent lower revenue earnings for the state
government; or overvaluation, resulting in the inability of the concession holder to
Auctioning, therefore, is not suited for prospecting. For prospecting, a transparent
“first-in-time” principle is used across the world. By mandating auctioning of
prospecting-cum-mining leases, the Bill has introduced huge uncertainty in future of
Similarly, the Bill might also end up restricting investments in exploration. The long-
term growth of sector is dependent on advanced technologies and large investments
in exploration. Though public investment in exploration is important,
reconnaissance/ regional exploration requires private risk capital. The Bill
discourages this. On the one hand, it promotes “open sky” policy for reconnaissance
by granting non-exclusive permits, while on the other hand it does not guarantee
any return to the investors. This will restrict investment in high-tech exploration,
which is urgently needed for deep-seated strategic minerals.
Finally in all cases of auctioning, conditions of bidding should be structured
appropriately taking into account social and environmental safeguards. This is not
being done currently forauctioning coal-mining leases, and should also not be the
case for auctioning of mining leases of other minerals.
5. Does the Bill put in place the regulatory and the facilitative institutions for the
transparent and accountable functioning of the mining sector?
We know that today, the mining sector is plagued by poor and multiple regulations,
discretionary decision-making powers, weak institutions, inadequate monitoring and
feeble enforcement. These are the main reasons for large-scale irregularities that exist
today, be it illegal mining, destruction of environment or ill treatment of mining-affected
communities. Simply put, the entire governance structure of the sector is outdated and
needs serious reforms.
Just one example can demonstrate the inefficiency and inadequacy that exists in the
governance structure.With respect to environment, health and safety management
in the mines, currently, four regulatory institutions are involved. The Ministry of
Environment, Forest and Climate Change (MoEF&CC) is responsible for giving
environmental and forest clearances, the IBM clears mining and Environment
Management Plans (EMPs) – the MoEF&CC can also clear EMPs , State Pollution
Control Boards are responsible for giving Consent To Establish and Consent To
Operate under the Water Act, 1974and the Air Act, 1981, and the Directorate
General of Mines Safety is responsible for monitoring the health and safety of
workers.There is a lot of overlap in the responsibilities of these institutions, with
each having very little capacity to monitor and enforce the law. Removing
multiplicity of these institutions and strengthening their capacity must be a priority
of mining governance reform. This has not been addressed in the MMDR 2015 Bill.
The MMDR Bill 2011, had provisions for serious institutional reforms. These
included provisions for setting up a National Mineral Royalty Commission (NMRC)
by the central government to review and suggest revisions in royalty rates and dead
rent rates; establishment of National and State Mineral Fund to support to R&D in
sustainable mining, developing capacity of IBM and of State Directorates, detecting
and preventing illegal mining, promoting scientific mining. The 2015 Bill does not
The major reforms proposed by the MMDR Bill, 2015 include introduction of an
auction mechanism for allocating all mining concessions; provisions for timely
decisions; increase in penalty for violations; and creating special courts for speedy
trial of offences. Considering the challenges, these reforms are inadequate and some
of them could potentially create more problems. For instance, simply increasing
penalty for violations within the existing institutional framework makes rent-
seeking behavior even more lucrative and will not be effective in curbing illegality.
Similarly, auctioning of mineral concessions requires strong and scientifically
competent institutions to establish reserves and valuation. In the absence of such
auctioning can be manipulated. Auctioning, therefore, is not a substitute to but a part of the larger reform in governance. This fact has been missed in the MMDR 2015 Bill.
• The Bill also has other major shortcomings.For instance, it does not address the issue of illegal mining adequately. The issue has been primarily addressed by increasing penalty or through trials once offences occur. This misses out on the need to strong institutions that can actually curb such activities. The Bill also promotes captive mines. Our experience has been that if one wants to see poor mining practices, captive mines can be the ones. These issues we have addressed in detail in our policy briefing and our research in evaluating the performance of the cement sector, and the iron and steel sector.
Finally we have to consider the MMDR Amendment Bill, 2015 along with other ongoing
regulatory reforms; the proposed changes in LandBill, 2015 (the Right to Fair
Compensation and Transparency in Land Acquisitions, Rehabilitation and Resettlement
Amendment Bill, 2015), and the report (November, 2014) of the High Level Committee of
the MoEF&CC chaired by TSR Subramanian, suggesting revisions in all major
environmental laws. While, the MMDR Bill, 2015, discourages consultation, excludes
affected people and reduces the benefit that local communities can get from the mining
sector, the Land Bill removes the clause requiring community consent, and the
Subramanian Committee report recommends fast-tracking of environment and forest
clearances for mining projects. If we join all dots, we are back to where we started in 1990.
An era of exploitative mining, which will not balance the conflicting interests of affected
communities or environment and forests.
In conclusion, we would like to state that while we urgently need reforms and
therefore amendments in the MMDR ACT, 1957, but we need these for the right
reasons. The revisions must be brought about to make mining sector socially,
environmentally and economically viable. The MMDR Act 2015 does not measure up
to this challenge and it must be revised before it is cleared by the Parliament.