Mining reforms on hold as ministries differ

A sweeping set of reforms proposed for the country's mining sector have led to a faceoff between the Union law and mines ministries.

The mines ministry has suggested that the Mines and Minerals (Development and Regulation) Act of 1957 be replaced by a new law, which proposes, among other things, sharing of profits with the local population and the state government.

Through the new law, the ministry not only aims to tackle corruption in the sector, but also address Naxalism in mineral-rich areas.

While proposing open bidding for mining licenses, the new law seeks to make sharing of at least 26 per cent of profits with the local population mandatory. In most mineral-rich areas, tribals constitute a majority of the local population.

"This step will help eradicate the feeling of alienation of the tribals, as they will be a part of the business," a source in the mines ministry said. "This will also counter the Maoist charge that business houses extract the mineral resources while the local inhabitants continue to live a life of misery."

But, the law ministry is not very keen to give the states a bigger share of profits from mining. Sources said one reason behind its reluctance is the fact that most mineral-rich states are ruled by non-Congress party governments.

Sources said the Union mines minister, B K Handique, had, written at least two letters in the past month to law minister Veerappa Moily to clear the draft MMDR Bill 2010, but there has been no response.

As a result, while the draft bill was prepared in November 2009, it has not yet been placed before the Cabinet.

However, in a recent meeting with mines ministry officials, Moily asked them to re-draft the Bill, keeping in mind the Supreme Court judgment in the gas dispute between Reliance Industries and Reliance Natural Resources Limited. In this case, the apex court had ruled that natural resources belong to the people of the country and the Centre was the custodian.

Sources in the mines ministry are worried as they feel the RIL-RNRL case judgment has no bearing on the mining sector. "That was an off-shore issue, while this is an on-shore resource. That was related to gas, while the MMDR deals with minerals," said an official.

Another section of the mines ministry feels that as the proposed law brings more revenue opportunities for the state, there is an attempt by a section of the law ministry to thwart this. They said this could be because most of the mineral-rich states, such as Jharkhand, Orissa, Chhatisgarh and Karnataka, are ruled by non-Congress party governments.

The MMDR Act was among the first 100 days initiative announced when the UPA government returned to power in May 2009.

The proposed law also would set up a separate tribunal at the Centre and special courts at the state level to fast-track disputes. For the first time, a major reform initiative in the mining sector also aims at full transferability of mines to encourage specialised explorations, cluster mining and small deposits for cooperatives of small miners.

As the proposed law deals with the complex issue of tribal welfare in Naxal areas, a portion of the royalty will be set aside to have a Mineral Fund for sponsoring local area developments. "The miners will have to show that there is a tangible improvement in the socio-economic life of the locals due to the mining activities in an area. The days of just handing over a few thousand rupees and evicting the tribal population will be over. The miner will have to give a well-conceived rehabilitation package for the displaced locals. They will also get priority in getting jobs in the mine field," said an official in the mines ministry.

"The objective of this bill is to ensure the tribals don't come under the influence of the Maoists and perceive mining activities as a threat. It should be an opportunity of development for them," added the official. The miners will also have to give a detailed plan of sustainable development for that area.

The new bill also proposes to do away with the "renewal" system and introduce "extensions" for miners. "We have seen that most of the illegal mining activities happen when the existing miners apply for renewal of license. Corrupt officials sit on the files and encourage illegal activities. We are in favour of giving automatic extension instead of arbitrary decisions on renewals."

The Indian Bureau of Mines, the apex body, is also set to gain more powers and act as a technical regulator.