District Mineral Foundations

News Excerpt:

The Union govt recently informed SC that states' revenue generation from major minerals has not been affected because of central control over these natural resources.

Key highlights from the revenue-earning data sheet:

  • The Solicitor General presented a detailed revenue-earning data sheet of mineral-yielding states before the court. 
    • He said states have multiple revenue streams from the mining and mineral sector, the first being royalty and dead rent under Section 9 of the Mines and Mineral (Development and Regulation) Act.
  • Since FY 2016-17, states have received a total of Rs 1,57,000 crore as royalty from major minerals. 
  • In addition to royalty, the auctioned mines have contributed Rs 40,000 crore to the top state exchequer.

District Mineral Foundations:

  • Through the amendment to the Mines & Minerals (Development & Regulation) (MMDR) Act in 2015, the Government of India has made provisions for establishing District Mineral Foundations in all the districts affected by mining. 
  • Accordingly, Section 9(B) of the MMDR Act provides for the establishment of DMF as a non-profit body, the objective of DMF, and the power of the State Government to prescribe the composition and functions of the District Mineral Foundation.
  • The objective of the District Mineral Foundation is to work for the interest and benefit of persons and areas affected by mining-related operations in the manner prescribed by the state government. 
  • So far, DMFs have been set up in 645 districts in 23 States in the country that have framed DMF rules.
  • The composition and functions of the District Mineral Foundation shall be as prescribed by the State Government.
  • The State Government, while making rules under sub-section (2) and (3), shall be guided by the provisions contained in Article 244 read with Fifth and Sixth Schedules to the Constitution relating to administration of the Scheduled Areas and Tribal Areas and the Provisions of the Panchayats (Extension to the Scheduled Areas) Act, 1996 and the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006.
  • DMFs are funded by statutory contributions from mine leaseholders.

Mines & Minerals (Development & Regulation) (MMDR) Act in 2015:

  • It amends the Mines and Minerals (Development and Regulation) Act, 1957.  
    • 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.
  • It adds a new Fourth Schedule to the Act.  It includes bauxite, iron ore, limestone, and manganese ore and is defined as a notified mineral.  
    • The central government may, by notification, amend this Schedule.
  • It 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 areas.  
    • 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 this Act, 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.
    • On expiry of the lease, instead of being renewed, the leases shall be put up for auction, as specified in the Act.
  • Auction of notified and other minerals: It 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 the 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 specific end use and allow only eligible end users to participate in the auction, if necessary.
  • Transfer of mineral concessions: It states that the holder of a mining lease or prospecting license-cum-mining 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 approved.  
    • No transfer shall occur 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: It creates a District Mineral Foundation (DMF) and a National Mineral Exploration Trust (NMET).  
    • The DMF is to be established by the state government to benefit persons in districts affected by mining-related operations.  
    • The central government shall establish the NMET 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 per cent of the royalty.

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