Salient Features of Mineral (Auction) Rules,

2015
Following the successful initiation of auctioning coal blocks, the Central Government of
India has framed the Mineral (Auction) Rules, 2015 for auctioning other minerals.
However, the unlike coal, the mineral auctions will be conducted under the ambit of
State Governments. Through auctions the State Governments will grant the leases in
two forms Mining Lease where evidence of mineral contents is established and
Composite Lease, a combination of a prospecting licence (PL) and a mining lease (ML),
where there is inadequate evidence of mineral contents.
The rules will be applicable to all minerals, except (a) coal & lignite, (b) atomic minerals
like uranium, lithium, zirconium, titanium etc. and (c) minor minerals like building
stones, gravel, ordinary clay, ordinary sand etc.

Salient Features
Role of Government: The Government will initiate an auction process for grant of a
mining lease with respect to an area within the State. It will issue a notice inviting
tender (NIT) with respect to mineral auction, identify and demarcate the area where a
mining lease is proposed to be granted through auction by using total station and
differential global positioning system. It is also required to classify the area so
demarcated into forests land, land owned by the State Government and land not
owned by the State Government.
The tender document will also include estimated mineral resources and brief
particulars regarding evidence of mineral contents and list of all clearances and
permissions obtained with respect to such area in order to commence mining
operation.
Eligibility Conditions: The eligibility conditions for participating in the auction has
been simplified and categorized according to the Value of Estimated Resources (VER)
which is defined as the product of (i) the estimated quantity of mineral resources for which the mineral block is being
auctioned, expressed in metric tonne; and

(ii) the average price per metric tonne of such mineral as published by Indian Bureau of
Mines for the relevant State for a period of twelve months immediately preceding the
month of computation of the Value of Estimated Resources.

* Value of Estimated Resources

1 applicant, including an individual
2 applicant, not being an individual
3 applicant, being an individual
It has also been mentioned that the mineral reserve should not exceed 1.25 times the
requirements of minerals for the specified end use over a period of 50 years.
Specific End Use: In addition to the specified end use for some minerals as given in
the table below, the State Government has been given the power to reserve particular
mine or mines for any particular industry. It can also earmark a certain percentage of
mines for a specific end use.

However, it has been stipulated that the minerals extracted under the mining
lease can only be used for the specified end use and cannot be used for
merchant purposes.
Auction Modalities: The auction will be conducted electronically. The bidding will be
done in two rounds. In the first round the bidders will be required to furnish the

technical details and the Initial Offer which has to be equal to or greater than the
reserve price mentioned by the Government.
In the tender document the Government will specify a Reserve Price which will be the
minimum percentage of the value of mineral despatched. The value of mineral
despatched shall be an amount equal to the product of (i) mineral despatched in a month; and (ii) sale price of the mineral (grade-wise and
State-wise) as published by Indian Bureau of Mines for such month of despatch.
The highest initial offer in the first round will be considered as the floor price in the
second round where the technically qualified bidders will be required to bid for the
final offer for the lease area in terms of percentage of the value of mineral dispatched
which the bidder will like to pay to the State Government.

Salient Features of MMDR Act 2015

The

Mines

and

Minerals

(Development

and

Regulation) Amendment Bill, 2015 was introduced in

Lok Sabha on February 24, 2015. The Bill amends the
Mines and Minerals (Development and Regulation) Act,
1957.

The Bill replaces the Mines and Minerals (Development

and Regulation) Amendment Ordinance, 2015
promulgated on January 12, 2015.

The Mines and Minerals (Development and Regulation)

Act, 1957 regulates the mining sector in India and
specifies the requirement for obtaining and granting
mining leases for mining operations.

The Bill adds a new Fourth Schedule to the Act. It

includes bauxite, iron ore, limestone and manganese ore
and are defined as notified minerals. The central
government may, by notification, amend this Schedule.

The Bill creates a new category of mining license i.e.

the prospecting license-cum-mining lease, which is a
two stage-concession for the purpose of undertaking
prospecting operations (exploring or proving mineral
deposits), followed by mining operations.

Maximum area for mining: Under the Act, a person

could acquire one mining lease for a maximum area of
10 sq km. However, for the development of any
mineral, the central government could permit the person
to acquire one or more licenses or leases covering
additional area. The Bill amends this provision to allow
the central government to increase the area limits for
mining, instead of providing additional leases.

Lease period: Under the Act, a mining lease was granted

for a maximum of 30 years and a minimum of 20 years
and could be renewed for a period not exceeding 20
years. Under the Bill, the lease period for coal and
lignite remains unchanged. For all minerals other than
coal, lignite and atomic minerals, mining leases shall be
granted for a period of 50 years. All mining leases
granted for such minerals before the Bill, shall be valid
for 50 years. On expiry of the lease, instead of being
renewed, the leases shall be put up for auction, as
specified in the Act.

Lease extensions: The Bill specifies that any lease

granted before the commencement of the Bill, shall be
extended: (i) up to March 31, 2030 for minerals used for
captive purpose (specific end-use) and up to March 31,
2020 for minerals used for other than captive purpose,
or (ii) till the completion of renewal period, or (iii) for a
period of 50 years from the date of grant of such lease,
whichever is later. This provision shall not apply to

mining leases for which renewal has been rejected,

granted, or lapsed.

Auction of notified and other minerals: The Bill states

that state governments shall grant mining leases and
prospecting license-cum-mining leases for both notified
and other minerals. Prospecting license-cum-mining
lease for notified minerals shall be granted with the
approval of central government. All leases shall be
granted through auction by competitive bidding,
including e-auction.

The central government shall prescribe the terms and

conditions, and procedure for auction, including
parameters for the selection of bidders. For mining
leases, the central government may reserve particular
mines for a specific end use and allow only eligible end
users to participate in the auction, if found necessary.

Transfer of mineral concessions: The Bill states that the

holder of a mining lease or prospecting license-cummining lease may transfer the lease to any eligible
person, with the approval of the state government, and
as specified by the central government. If the state
government does not convey its approval within 90 days
of receiving the notice, the transfer shall be considered
as approved. No transfer shall take place if the state
government communicates, in writing, that the
transferee is not eligible. Only mineral concessions
granted through auction will be allowed for transfer.

Institutions: The Bill provides for the creation of a

District Mineral Foundation (DMF) and a National
Mineral Exploration Trust (NMET). The DMF is to be
established by the state government for the benefit of

persons in districts affected by mining related

operations. The NMET shall be established by the
central government for regional and detailed mine
exploration. Licensees and lease holders shall pay the
DMF an amount not more than one-third of the royalty
prescribed by the central government, and the NMET
two percent of royalty.

THE MINERAL CONSERVATION AND DEVELOPMENT

RULES 1988
These rules were made by the Central Government for the conservation and development of the minerals
is exercise of the power conferred by Section 18 of the MM(D&R) Act, 1957. This rule has been
completely recast in 1988 by incorporating provisions on submission of mining plans and protection of
environment, by repealing the MCDR- 1958. However this rule applies to only metalliferous mines
excluding atomic and minor minerals as is administered by Indian Bureau of Mines (IBM), under Ministry
of Mines, Government of India.
There is no equivalent/ comparable Act/Rule for coal mines at present. Before nationalization of coal
mines in 1972, the coal mines (conservation and safety) Act-1952 was being administered by Coal Board,
which has been since abolished. Now after liberalization, GOI, has amended the the Coal Mines
Nationalization Act and has allowed private sector coal mining and washery for captive power plant and
industry. This may again revive the Coal Mines (Conservation and Safety) Act with suitable modifications,
to also include protection of environment.
The salient features MCDR-1988 are as given below
Rule 3A of Chapter 1A dealing with the reconnaissance operations states that every person
holding a reconnaissance permit shall submit within a period of sixty days from the date of execution
of the reconnaissance permit, a scheme of reconnaissance operations indicating the manner in which
he proposes to carry out reconnaissance operations in the area covered by the permit.

Rule 4(2) of Chapter II dealing with the prospecting operations states that a prospecting scheme
shall include-(a) baseline information of prevailing environmental conditions before the beginning of
prospecting operations; and(b) steps proposed to be taken for protecting of environment which will
include prevention and control of air and water pollution, progressive reclamation and rehabilitation of
the land disturbed by the prospecting operations, a scheme for the plantation of trees, and such other
measures as may be directed from time to time by the Controller General or the authorized officer for
minimizing the adverse effect of prospecting operations on the environment.

Rule 31 of Chapter V dealing with the protection of environment states that every holder of a
prospecting license or a mining lease shall take all possible precautions for the protection of
environment and control of pollution while conducting prospecting, mining, beneficiation or
metallurgical operations in the area.

Rule 32 of Chapter V dealing with the removal and utilization of top-soil directs that every holder
of a prospecting license or a mining lease shall, wherever top-soil exists and is to be excavated for
prospecting or mining operations, remove it separately. The top-soil so removed shall be utilized for
restoration or rehabilitation of land which is no longer required for prospecting or mining operations or
for stabilizing or landscaping the external dumps. Whenever the top-soil cannot be utilized
concurrently, it shall be stored separately for future use.

Rule 33 of Chapter V related to storage of over burden, waste rock, etc. lays down the following
conditions-

* Every holder of a prospecting license or a mining lease shall take steps so that the overburden,
waste rock, rejects and fines generated during prospecting and mining operations or tailings, slimes and
fines produced during sizing, sorting and beneficiation or metallurgical operations shall be stored in
separate dumps.
* The dumps shall be properly secured to prevent escape of material therefrom in harmful quantities
which may cause degradation of environment and to prevent causation of floods.
* The site for the dumps, tailing or slimes shall be selected as for as possible on impervious ground to
ensure minimum leaching effects due to precipitation.
* Wherever possible, the waste rock, overburden, etc. shall be back-filled into the mine excavations
with a view to restoring the land to its original use as far as possible.
* Wherever back-filling of waste rock in the area excavated during mining operations is not feasible,
the waste dumps shall be suitably terraced and stabilized through vegetation or otherwise.
* The fines, rejects or tailing from mine, beneficiation or metallurgical plants shall be deposited and
disposed in a specially prepared tailings disposal area such that they are not allowed to flow away and
cause land degradation or damage to agriculture field, pollution of surface water bodies and ground water
or cause floods.

Rule 34 of Chapter V dealing with reclamation and rehabilitation of lands states that every holder
of prospecting license or mining lease shall undertake the phased restoration, reclamation, and
rehabilitation of lands affected by prospecting or mining operations and shall complete this work
before the conclusion of such operations and the abandonment of the prospect or mine.

Rule 35 of Chapter V outlining precautions against ground vibrations states that whenever any
damage to public building or monuments is apprehended due to their proximity to the mining lease
area, scientific investigations shall be carried out by the holder of mining lease so as ;to keep the
ground vibrations caused by blasting operations within safe limit.

Rule 36 of Chapter V states that stopping in underground mines shall be so carried out as to keep
surface subsidence under control.

Rule 37 of Chapter V outlines the precautions against air pollution and states that sir pollution due
to fines, dust, smoke or gaseous emissions during prospecting, mining, beneficiation or metallurgical
operations and related activities shall be controlled and kept within Permissible Limits specified under
various environmental laws of the country by the holder of prospecting license or a mining lease.

Rule 38 of Chapter V dealing with discharge of toxic liquid states every holder of prospecting
license or a mining lease shall take all possible precautions to prevent or reduce the discharge of toxic
and objectionable liquid effluents from mine, workshop, beneficiation or metallurgical plants, tailing

ponds, into surface water bodies, ground water aquifer and useable lands, to a minimum. These
effluents shall be suitably treated, if required, to conform to the standards laid down in this regard.

Rule 39 of Chapter V outlines the precautions against noise and states that the noise arising out
of prospecting, mining, beneficiation or metallurgical operations shall bed abated or controlled by the
holder of prospecting license or a mining lease at the source so as to keep it within the permissible
limit.

Rule 40 of Chapter V states that the standards and permissible limits of all the pollutants, toxins
and noise referred to in Rules 37 to 39 shall be those notified by the concerned authorities under the
provisions of the relevant statutes from time to time.Rule 40 of Chapter V dealing with restoration of
flora states that every holder of prospecting license or a mining lease shall carry out prospecting or
mining operations, as the case may be, in such a manner so as to cause least damage to the flora of
the area held under prospecting license or mining lease and the nearby area. Every holder of
prospecting license or mining lease shall-

# Take immediate measures for planting in the same area or any other area selected by the Controller
General or the authorized officer not less than twice the number of trees destroyed by reason of any
prospecting or mining operations;
# Look after them during the subsistence of license/lease after which these trees shall be handed over
to the state Forest Department or any other authority as may be nominated by the Controller General or
the authorized officer; and
# Restore to the extent possible, other flora destroyed by prospecting or mining operations.

THE MINERAL CONCESSION RULES 1960

The Central Government made these rules in exercise of power conferred by Section13 of the Mines and
Minerals (Regulation and Development) Act, 1957. This rule is applicable to all minerals including Coal,
lignite, atomic minerals etc. and deals with procedure for grant of Prospecting Licence (PL) and Mining
Lease (ML) of major minerals only. It does not apply to oil fields or minor minerals. Minor minerals are
notified by Central Government from time to time, for which the State Governments, frame rules for
issuing permits, licences etc.The salient features of these rules are outlined hereunder
Chapters II, III and IV contain rules for the grant of reconnaissance permits as well as grant and
renewal of PL and ML only in respect of the land in which the minerals vest with the Government of
India.

Rule 4 through Rule 7 of Chapter II lay down the procedure for the grant of reconnaissance
permit by the State Governments along with the conditions of reconnaissance permit, which include
that the permit holder has to obtain permission to enter forest land for reconnaissance purpose,
under the Forest (Conservation) Act.

Rules 8 to 21 in Chapter III lay down the procedure for the grant/renewal of prospecting license,
conditions of prospecting license, security deposit, etc. The conditions relating to environmental
mitigation measures are laid down in Sub-rule 1(x) of Rule 14. These are as given below-

The licensee shall

(a) take immediate measures for planting in the same area or any other area selected by the
Central or State Government not less than twice the number of trees destroyed by reasons of any
prospecting;
(b) look after them during subsistence of the license after which these shall be handed over to the
State Forest Department or any other authority as may be nominated by the Central or State
Government; and
(c) restore to the extent possible, other flora destroyed by prospecting operations.

Sub Rule 2(A)(iii) of Rule 14 imposes restrictions on felling of the trees on unoccupied and
unreserved Government land.

Sub Rule 2(A)(v) of Rule 14 imposes restrictions on operations in reserved or protected forests.

Rules 22 through Rule 46 relate to the grant/renewal of mining lease and related issues. Sub
Rule 5 of Rule 22 outlines that the following details are to be shown on the mine plans-

* Extent of mining operations

* Geological details, mineral reserves
* Area under manual mining and under mechanized mining separately
* Natural water courses, forest areas with diversity of trees, assessment of impact on forest land
surface and other environmental parameters including air and water pollution.

Rule 27, Sub Rule (1)(s) lays down the conditions that relate to environmental protection in the
mining operations. These are outlined belowThe lessee shall
* Take immediate measures for planting in the same area or any other area selected by the Central
or State Government not less than twice the number of trees destroyed by reasons of any mining
operations;
* Look after them during the subsistence of the lease after which these trees shall be handed over
to the state Forest Department or any other authority nominated by the Central or state Government; and
* Restore, to the extent possible other flora destroyed by the mining operations.

Rule 22, Sub Rule (2) states that a mining lease may contain such other conditions as the State
Government may deem necessary in regard of the following, namely
* The compensation for damage to the land covered by the lease
* The felling of trees
* The entering or working in a reserved or protected forest.