Why in news?

The Parliament has passed Mineral Laws (Amendment) Bill 2020 that will amend the Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015. 

Under the Bill:

  1. Allocation of coal/lignite blocks for composite prospecting licence cum mining lease has been provided.

o Currently, separate licenses are provided for prospecting and mining of coal and lignite, called prospecting license, and mining lease, respectively.

Prospecting includes exploring, locating, or finding mineral deposit.

o The Ordinance adds a new type of license, called prospecting license-cum-mining lease. This will be a composite license providing for both prospecting and mining activities.

  1. Requirement of previous approval in cases where allocation of blocks was made by Central Govt has been dispensed with.
  1. This will speed up the process of implementation of projects, ease of doing business, simplification of procedure and benefit all the parties in areas where minerals are located.

Background:

  • In 2018, the government had allowed commercial mining by private entities but non-coal companies couldn’t participate in the auction.
  • In August 2019, the government announced 100 per cent foreign direct investment (FDI) under the automatic route in coal mining for open sale, besides creating associated infrastructure, such as washeries.

Implications of this move- significance:

  • This opens up the sector to players outside steel and power as well as removes end-use restrictions.
  • It will create an efficient energy market and bring in more competition as well as reduce coal imports. India imported 235 million tonnes (mt) of coal last year, of which 135 mt valued at Rs 171,000 crore could have been met from domestic reserves.
  • It might also put an end to Coal India Ltd’s monopoly in the sector.
  • It would also help India gain access to high-end technology for underground mining used by miners across the globe.

New mining target:

In 2018, the government allowed commercial mining by private entities and set a mining target of 1.5 billion tonnes by 2020. Out of this, 1 billion tonnes was set to be from Coal India, while 500 million tonnes was to be from non-Coal India entities. This target has now been revised to 1 billion tonnes by 2023-24.

Who grants permission for mining?

  • The state governments grant permission for mining, known as mineral concessions, for all the minerals located within the boundary of the state, under the provisions of the Mines and Minerals (Development and Regulation) Act, 1957 and Mineral Concession Rules, 1960.
  • However, for minerals specified in the First Schedule to the Mines and Minerals (Development and Regulation) Act, 1957, Central government approval is necessary before granting the mineral concession.
  • Minerals specified under the First Schedule include hydrocarbons, atomic minerals and metallic minerals such as iron ore, bauxite copper ore, lead precious stones, zinc and gold.

Coal sector in India:

  • Despite having the world’s fourth largest coal reserves, India imported 235 million tonnes (mt) of coal last year, of which 135mt valued at Rs.171,000 crore could have been met from domestic reserves.
  • India’s state-run coal giant has been unable to meet growing demand despite abundant resources.
  • The South Asian nation depends on Coal India for more than 80 per cent of its domestic production and the miner has consistently fallen short of production targets in the last few years.
  • The government has been progressively liberalizing the coal sector over the last several months to attract new investments, and getting rid of this archaic end-use restriction was a key step.
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