President promulgates mining ordinance

President Pranab Mukherjee has given his assent on mines ordinance that paves the way for auctioning of mines containing minerals such as iron ore and bauxite.

The ordinance, which amends the 57-year old MMDR Act, provides for granting mines for 50 years through a competitive bidding route including e-auction.

The President has promulgated the ordinance, according to  an official notification.
The ordinance empowers the Centre to prescribe terms and conditions and procedure for bidding which include production sharing or royalty payment or a combination of both.

"For the purpose of granting a mining lease in respect of any notified mineral in such notified area, the state government shall select, through auction by a method of competitive bidding , including e-auction ...," the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015, said.

"The Central government shall prescribe the terms and conditions and procedure, subject to which the auction shall be conducted, including the bidding parameters for the selection, which may include a share in the production of the mineral, or any payment linked to the royalty payable, or any other relevant parameter, or any combination or modification of them," it added.

The ordinance approves granting of mining leases for a period of 50 years. Those already granted before it would also be deemed to have been given for a period of 50 years.
"On the expiry of the lease period, the lease shall be put up for auction as per the procedure in this Act," it said.

The Union Cabinet, chaired by Prime Minister Narendra Modi, had earlier approved the ordinance on January 5.

The Ordinance also prescribes setting up of a non-profit trust, District Mineral Foundation, for the welfare of the project-affected people.

"The objective of the District Mineral Foundation shall be to work for the interest and benefit of persons, and areas affected by mining related operations ...," it said.

The holder of a mining lease or a prospecting licence-cum -mining lease would have to pay to District Mineral Foundation in addition to the royalty, but not exceeding one-third of such royalty.

Also there is a provision for setting up National Mineral Exploration Trust and the holder of the lease or a prospecting licence-cum-mining lease would pay 2 per cent of the royalty.
"The object of the Trust shall be to use the funds accrued to the Trust for the purposes of regional and detailed exploration ...," it said.

Violators would be punished with fines of upto Rs 5 lakh per hectares of the area and imprisonment for up to five years.