NATIONAL MINERAL POLICY, 2019 – KEY FEATURES
NATIONAL MINERAL POLICY, 2019 – KEY FEATURES
Prof. (Dr.) Sairam Bhat, Professor of Law and Coordinator, CEERA, NLSIU;
Ms. Lianne D’Souza, Research Fellow, CEERA, NLSIU;
Mr. Vivek Basangoudar, 2nd Year Law Student, Jindal Global Law School.
INTRODUCTION
India is a nation that prides itself for its diverse natural resources which include mineral-rich deposits. To streamline the tapping of these resources in pursuance of promoting economic development, a National Mineral Policy was devised in 1993. As this Policy did not yield encouraging results, it was replaced by the National Mineral Policy of 2008, which was introduced with the aim achieving a balanced social and economic growth in the mining sector. The 2008 Policy was designed to augment the reserve-base through improvement in mining methods, within the overarching agenda of sustainable development.[1] However, it suffered on many accounts. The Policy proved to be good only on paper and fell short of any effective implementation. The Supreme Court also took note of its lacunae and opined that in the advent of rapacious mining in the country, this decade-long Policy was not being enforced due to the involvement of very powerful vested interests or a failure of nerve.[2] Rampant unlawful mining had become a menace which was not being resolved in any manner by the Policy. Owing to this, the Apex Court directed the Centre to take a fresh look at the 2008 Policy and consider revamping the policy framework.[3] Subsequent to this, a committee to review the policy was formed under the chairmanship of the Additional Secretary of the Ministry of Mines, Dr. K Rajeswara Rao. After consulting several parties and after receiving suggestions, the Committee submitted a report which served as the basis for the National Mineral Policy of 2019.
As the National Mineral Policy of 2019 was an outcome of a rather outdated and unworked predecessor, the main objective of this Policy was to plug the gaps in the previous 2008 Policy. The 2019 Policy aimed to provide effective, meaningful and implementable policy through transparency, greater regulation and enforcement, balanced growth socially and economically while ensuring sustainability in mining practices.[4] The policy evoked mixed reactions as it promulgated a shift of focus from the public sector to the private sector. In hindsight, the key aspects and lacunae of the policy have been discussed to inspect the effectiveness of the same.
KEY TAKEAWAYS FROM THE POLICY
Impetus to Private Sector Mining
The National Mineral Policy, 2019 was envisioned with the primary objective of revamping the regulatory regime for exploration, extraction and management of minerals. The aim of the Policy is to promote self-reliance by boosting the domestic industry and by ensuring a conducive environment for ease of doing business in India. To this effect, the Policy had been designed to encourage increased participation by the private sector.
Exploration by the private sector has been endorsed by introducing measures like longstanding trade policies, global benchmark implementation with regards to taxes, levies and royalties, rationalisation of unused reserved areas of the public sector, auctioning of reserve unused areas to engage private sector participation and the transfer of mining leases. The Policy provides for systematic and scientific procedures for prospecting and exploration and grant of mineral concessions. For example, with regard to the mining licences, the policy allows for the auctioning of unexplored areas with a unique composite licence comprising reconnaissance permit, prospecting and mining licence which has been regulated on the basis of revenue share. Prior to this, separate licenses were to be availed for regional exploration, prospecting and extraction/mining of minerals. However, to provide for a seamless transition in securing mining licenses, the Policy provides for a one-stop solution in the form of composite licenses. In addition to this, private investments are encouraged by offering the right of first refusal in the auction stage to holders of prospecting permits and reconnaissance permits.
An industry status to the mining sector was also proposed by the policy which would imply a shift in its current status of an economic activity under the primary (agriculture) sector. The change was brought in to incentivise the private sector to actively engage in mining operations as a separate industry subject to regulation.[5] This would further the cause of development of the private sector of mining as it would allow for better financing and would also allow for acquisition of mineral assets in other countries.[6] On the contrary, concerns have arisen in light of the regulations that accompany an industrial setting. By conferring an industrial status, the mining sector may be open to the plethora of laws such as the Industrial Disputes Act, over and above the existing legal framework that binds the sector.[7]
Foreign Trade and Investment
Another striking feature of the 2019 Policy is the aim to attract foreign investment in the mining sector. As per the statistics collated by the Ministry of Mines, the value of Indian exports showed a mixed trend for most of the minerals in 2016-17 as compared to that in the previous year.[8] While some minerals saw a rise in exports, the overall trend in foreign trade indicated a trade deficit in export of minerals.[9] Therefore, to promote the indigenous mineral industry and steer the demand for minerals from India in the international market, the Policy promotes for identifying areas of cooperation with other countries having complementary resource base. Furthermore, with a view of increasing Foreign Direct Investment in the mining sector, it hints at the need for a long-term export-import policy for the mining sector alone.
Stakeholders and their Interests
The Union Cabinet has furthered the cause of transparency and has done so by supporting the concept of auctions which would limit the role of discretion in granting permits. Mineral rich states have seconded the decision as it would only benefit them through an increase in overall revenue.[10] However, some critics opine that auctioning of mining blocks to highest bidders would disincentivise private sector participants in exploration as the allocation would naturally be made in favour of the highest bidder.[11] Auctions in the mining industry generally result in increased costs, scarcity portrayal and interference with market forces. However, large corporations of the metal-making industry can participate in the same as they have sufficient resources and can increase their raw material security. Local communities might see a decrease in investment as the substantial surplus would be transferred to mineral rich states instead and this is clearly problematic and would prove the inefficiency of Corporate Social Responsibility. While large corporations may not make largescale windfall profits, the money would be transferred to the state treasuries as opposed to the deposition of such profits with NGOs and local communities. Downstream industries like R&D, metalmaking and manufacturing could see an adverse impact caused due to the auctions wherein prices of mineral ores would be hiked. This could possibly result in disincentivising industries.
Role of Authorities under the Policy
The Policy also recognises a prominent role of State in facilitating and regulating the exploration of mining activities by providing for the development of infrastructure and collection of taxes. States shall develop an Annual Business Plan/Road map to further the development of the mineral sector. State agencies shall only resort to fair play and transparency while allotting reserved areas to private sectors and the exclusion to the same is public interest. There will be an expedited and streamlined process to receive grants for clearances for commencement of mining operations and the states shall ensure trust between the government, miners, local communities and other stakeholders while doing the same. However, this could compromise the process as a whole as the quality of the same could decrease drastically.
Besides this the Policy provides for the creation of a unified authority in the form of an inter-ministerial body under the Ministry of Mines, along with members such as the Ministry of Coal, MoEarth Sciences, MoEFCC, Ministry of Tribal Affairs, Ministry of Rural Development, Ministry of Panchayati Raj, Ministry of Steel along with state governments. The authority shall institutionalise a mechanism to ensure sustainable mining while keeping in mind socio-economic issues in mining areas. The Authority shall advise the government on issues of rates of royalty, dead rent etc. This proposal emerges as a welcome step as a single authority with a diverse representative base would simply the procedural complexities in grants of permits or concessions.
Incorporation of Environmental Principles
The Policy has also incorporated principles of environmental law and governance within its design, albeit to a very limited extent. The Policy recognises the need for sustainable development by advocating the need to consider economic, social and environmental considerations in any decision-making process in the mining sector. It calls on the government to set benchmarks in mining operations based on their comparative performance on a sustainable development framework. Furthermore, it calls on the state to enforce standards of sustainable development on mining companies to promote environment-friendly techniques of mining. However, the reference to sustainable methods of mining are rather superficial and lack clear-cut directions on how they may be implemented.
The principle of inter-generational equity dictates that the posterity should have access to an equal amount of resources as the current generation. This concept was introduced in the policy as it proposed to constitute a inter-ministerial committee which would thereby institutionalise the same. Furthermore, the District Mineral Fund was to be utilised for the equitable development of project affected areas and parties. In the policy, the government claimed to identify areas of critical fragility in terms of ecology so as to declare them as ‘in-violate areas’ or ‘no-go areas’ and thereby prevent mining to prevent further destruction of ecology. Additionally, the Policy claimed to achieve a better semblance between the mineral based development and environment through the creation of Exclusive Mining Zones (EMZ) after receival of statutory clearances.[12]
LACUNAE IN THE POLICY
From a cursory glance the National Mineral Policy of 2019 does not completely encapsulate the core principles of environmental governance. To bring into context the Doctrine of ‘Public Trust’, the Policy dilutes the responsibility of the State to ensure that natural resources are used for the larger public good. The Policy enables the government to open up resources of the public to the private sector and this connects back to the privatisation of resources. The government claims that auctions would increase transparency but after the resources have been allocated, there could be little to no transparency on its usage. The infamous Coalgate Scam[13] could prove to be relevant here as captive usage of resources could occur again if resources were provided to the private sector without due diligence. Furthermore, the government hopes to cut down on the duration for clearances to expedite the usage of resources, but this could prove to be fatal as procedure could be compromised. With previous captive usage of resources, mere expedition could lead to easy transfer of resources without proper background checks and plans. While the government may have stated in the policy that the natural resources, including minerals, would be a shared inheritance where the State is a trustee, handing over of the resources to the private sector through auctions which can easily be bought through corrupt practices or through higher bidding may lead to excessive privatisation of common resources.
Environmental pollution arising out of mining activities poses to be a grave threat and the cause for the same is unscientific and rampant mining activities, callous pollution standards and pollution monitoring and improper mine management and closure practices. Bearing this in mind, the 2019 Policy pays very little or no heed to the growing of concerns of environmental pollution. While the Policy is primarily aimed to stimulate economic development by giving impetus to private sector players, it seems to turn a blind eye to the ‘sustainable’ facet of development in the mining sector. For instance, in the quest to encourage private player participation, the Policy gives way for auctioning mining blocks with pre-embedded clearances. This spells disaster from an environmental perspective as the grant of such pre-embedded clearances may lead to incessant exploitation of resources. A reduction in the stringency of procedural requirements may pave way for duplicitous activities in the mining sector. Furthermore, data monitoring of pollution in mining areas is practically non-existent. If environmental pollution is to be reduced, there is a dire need of data to analyse and identify highly polluted areas and this should have been addressed by the policy.
Similarly, the provision for transportation of minerals which was proposed to ease mobility of minerals from source point could have negative environmental implications. The Policy validates the usage of coastal waterways and inland shipping for the transportation of minerals and also permits the creation of mineral dedicated corridors to expedite the process of transportation of the same. However, inland waterways have proved to be a threat to marine life by creating huge vibrations that severely affect fishes, vertebrates and insects which can thereby cause death. The pollution brought by the usage of inland shipping can affect the gene pool diversity and can result in a lower number of species. Extensive use of inland shipping can affect local communities of fishermen as their occupation is directly in threat. [14] All these issues go to show that though the National Mineral Policy of 2019 provides an improvised facelift to the 2008 Policy, it is not bereft of many flaws, especially those giving rise to environmental concerns.
Featured Image sourced from – https://metrosaga.com/facts-about-kolar-gold-fields/
[1] National Mineral Policy, 2008, Ministry of Mines, Government of India, (Feb. 2, 2021, 4:00PM), https://www.mines.gov.in/writereaddata/Content/88753b05_NMP2008%5b1%5d.pdf
[2] Common Cause v. Union of India & Ors, Civil Writ Petition 114/2014, 2017 SCC OnLine SC 857.
[3] Id. at ¶ 228.
[4]National Mineral Policy, 2019 approved by Cabinet, Government of India (Jan. 20, 2021, 4:00PM), https://pib.gov.in/PressReleseDetail.aspx?PRID=1566733.
[5] Anshul Joshi, Incentivizing private sector crucial for mining and mineral exploration: TERI, Economic Times (Jan. 25, 2021, 8:00PM), https://energy.economictimes.indiatimes.com/news/coal/incentivising-private-sector-crucial-for-mining-and-mineral-exploration-teri/71157501.
[6] Anurag Vaishnav et al., Annual Policy Review, PRS Legislative Research (Jan. 20, 2021, 4:00PM), https://www.prsindia.org/sites/default/files/policy_peviews_pdfs/APR%202018-19.pdf.
[7] Rakhi Mazumdar, National Mineral Policy to Ease Merger and Acquisition of Mining Entities, Economic Times, (May 1, 2019), https://economictimes.indiatimes.com/industry/indl-goods/svs/metals-mining/national-mineral-policy-to-ease-merger-and-acquisition-of-mining-entities/articleshow/68221785.cms?from=mdr
[8] Indian Minerals Year Book 2016-17, (ed. 56th), Ministry of Mines, Government of India, (Feb. 2, 2021, 4:00 P.M.) http://ibm.nic.in/writereaddata/files/04252019125111Foreign%20Trade%202017.pdf
[9] Id.
[10] S. Vijay Kumar, National Mineral Policy 2019: A Remedy as Bad as the Disease, 3 Ecology Econ. & Soc’y – the INSEE J. 111, 112 (2020).
[11] Id. at p. 1.
[12] Supra note 4.
[13] Yash Singha, Coalgate Scam: A legal Picture, Jul. 8, 2020, IPleaders, available at https://blog.ipleaders.in/coalgate-scam-a-legal-picture/
[14] Navneel Maji, Inland Waterways: A Threat to Aquatic Life, Communities Dependent On Rivers?, BW Businessworld (Jan. 25, 2021, 8:00PM), http://www.businessworld.in/article/Inland-Waterways-A-Threat-To-Aquatic-Life-Communities-Dependent-On-Rivers-/23-07-2019-173818/.