States Asked to Issue Mining Leases to Firms

Notification Leases to be issued to companies that were granted Letters of Intent before the amended Act came into force

The mines ministry issued a notification to states to issue mining leases to companies that were granted Letters of Intent (LoIs) before the Mines and Minerals (Development & Regulation) Amendment Act, 2015 came into force.

The extraordinary gazette notification, "the Mines and Minerals Development and Regulation) removal of Difficulties Order 2017", is likely to benefit about 70 mining leases that were earlier saved under section 10(a)2c of the Act from lapsing next week.

In the notification, the ministry has tweaked the norms to allow obtaining of environment clearance for such mines after execution of the deeds. The mineral-rich state governments had issued LoIs to the mines about two years ago, while the Act necessitated that they be converted into mining leases before January 12, 2017.

The notification follows an opinion from the office of Attorney General of India, which said that the mines ministry should direct state governments to execute the pending leases before January 11. The order has asked state governments to accordingly process and expedite applications for grant of mining lease, incorporating the condition that companies can commence mining only after obtaining regulatory approvals from the Union ministries of environment, forest and climate change, and tribal affairs.

A total of 317 such LoIs were issued by state governments before January 2015 when the government promulgated an ordinance to change an older law that permitted grant of mining concessions to companies by the states on a discretionary basis. The amended mining Act allows grant of mining leases only through transparent online auctions.

The LoIs executed across 12 states including Odisha, Jharkhand and Karnataka were given a two-year window to be converted to mining contracts. The mines ministry was apprehensive that cancellation of the LoIs could result in mass litigation. The ministry expects the execution of mineral leases to push its plan to increase mining sector's share in GDP one percentage point in the next three-four years. The mining sector presently contributes 2.6% to the GDP.

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