In the past five years, the Iron ore mining sector has been in the limelight. From illegal exploitation to several restrictions imposed by government has led to drastic fall in Iron ore production in the country.
To contain illicit mining, the new government has improvised the existing mining law and introduced the Mines and Minerals (Development and Regulation) Amendment Bill 2015, which was vetted by the Parliament on March 20. Under the new act, prospecting and mining leases of major minerals including iron ore and manganese ore would be auctioned and the proceeds would go to the states just like the recent coal block auctions.
The Indian mining industry is looking out for the change that the amended MMDR bill will bring in years to come. The amendment recommends mines which are due for 2nd deemed renewal can continue to mine till 31 March 2020 in case of merchant and 31 March 2030 in case of captive miners.
Affect of MMDR (A) Act, 2015 on Mining Industry
Iron ore Production in India: Mining leases would be extended from the last renewal date up to 31 Mar’30 (for captive) and 31 Mar’20 (for merchant) or till completion of renewal period already granted if any, whichever is later. Hence, the mines which were due for 2nd deemed renewal have been granted mining permissions subject to necessary clearances like forest & environment. Will this provide the much needed impetus to Iron ore production in the country?
Cost of Mining: MMDR Amendment will increase cost of mining as District Mineral Foundation (DMF) is enforced, which is equivalent to 100% of the royalty. Are there other clauses in the new act that will further push up cost of mining?
Merchant Mining post MMDR: Based on the new bill, the existing mines meant for merchant sales will be auctioned after 2020. With mining cost expected to rise and currently subdued domestic demand coupled with falling global iron ore prices, what will be the future of commercial mining in India after 5 years?