The Mines and Minerals (Development and Regulation) Amendment Act, 2021 (‘MMDR 2021 Amendment’), which amends the Mines and Minerals (Development and Regulation) Act, 1957 (‘MMDR Act’), has been notified and made effective on March 28, 2021. The MMDR Act is the principal legislation in relation to, inter alia, grant and regulation of mineral concessions. Some of the key features of the MMDR 2021 Amendment are as follows:

i.     Sale of Minerals by Captive Mines: For all minerals other than atomic minerals, the MMDR 2021 Amendment permits (where mineral is used for captive purpose) a lessee to sell up to 50% of the total mineral produced in a year, after meeting the captive requirement, in such manner as may be prescribed by the Central Government and on payment of specified additional amount;

ii.    Removal of End-Use Restrictions: The MMDR Act provided that the Central Government may, in respect of certain minerals, reserve any particular mine for a particular end-use. This reservation of mine on the basis of end-use has been done away with;

iii.   Transfer Charges: The MMDR Act provided that only such non-auction mining leases could be transferred which were 100% captive – i.e., non-auction non-captive mines (including mines which were less than 100% captive) could not be transferred. The MMDR 2021 Amendment does away with this restriction. Accordingly, all non-auction mining leases can be transferred with the consent of the State Government, and in accordance with the applicable rules and regulations. Also, no transfer charges will be payable for any such transfers;

iv.    Existing Concession Holder Rights: When the MMDR Act was amended in 2015 to introduce the auction regime, the preferential right of such persons who had carried out reconnaissance or prospecting to obtain a prospecting license or mining lease, respectively, were saved/ preserved. The MMDR 2021 Amendment takes away such preferential right – accordingly, all pending cases for grant of mineral concessions on preferential (which were saved till now) will become infructuous;

v.     Transfers of Statutory Clearances: For minerals other than hydrocarbon energy minerals and atomic minerals, the MMDR Act provides that the successful bidder (selected through auction) of expiring mining leases will have the benefit of using the permits and consents granted to the previous lessee, for a period of two years within which the successful bidder has to apply and obtain new permits and consents. The aforesaid two year period limitation has been removed by the MMDR 2021 Amendment and so such bidder will have the benefit of the relevant permits and consents till they expire or are cancelled; and

vi.   Lapsing of Mining Lease: As per the MMDR Act, a mining lease lapses where the holder of such mining lease fails to undertake mining operations for a period of two years after the date of executing the lease, or having commenced mining operations, has discontinued the same for a period of two years. Certain exceptions and waiver related provisions were available in this regard in the MMDR Act.

The MMDR 2021 Amendment now provides that the State Government may, on an application made by the lease holder before it lapses and on being satisfied that it will not be possible for the lease holder to undertake production and dispatch/ continue such production and dispatch for reasons beyond his control, pass an order, within a period of three months from the date of receipt of such application, to extend the two year period for production and dispatch by a further period not exceeding one year. Such extension will not be granted more than once during the entire period of lease. The words “mining operations” have been replaced with “production and dispatch”, which is a small but important change.