Odisha authorises second and subsequent renewal of mine leases

Decision meant to help steel and aluminum companies facing raw material shortage

By Soundaram Ramanathan
Published: Friday 05 October 2012

The Odisha government has passed a resolution authorising second and subsequent renewal of mining leases of private companies. Such renewals are generally not issued by state governments unless the projects are accepted as being in the interest of mineral development by the Indian Bureau of mines (IBM) at the Centre.

The resolution order, dated October 3, cites the procedure for granting second and subsequent mine leases of the state. The Mines and Minerals (Development and Regulation) Act of 1957, allows for second and subsequent mine leases by a state, provided it satisfies itself fully that such renewal would be in the interest of mineral development. The resolution lays down four pre-conditions for the purpose of identifying and demarcating mineral development projects (see 'Conditions for lease renewal'). These conditions hold good for iron, manganese, chromite and bauxite mine leases held by private companies.

Prerogative of Indian Bureau of Mines

Conditions for lease renewal
  • If the mine lessee is mining minerals for captive use, then the 30-year captive mineral requirement of the lessee will be calculated. The renewal of mine lease area will be permitted only for this calculated amount. Mineral resource sourced from the other parts of the country by the lessee will also be taken into consideration before assessing this amount. In case there is more area left with minerals after the allocation, then it will be reserved for Odisha Mining Corporation a Public Sector Undertaking (PSU) wholly owned by the state government.
  • Mine lessee must carry out a proper prospection of the mine reserve in the lease area
  • Mine lessee must have taken definite visible steps to reduce environmental degradation of the lease area
  • Mine lessee must comply with mining and other laws like Mines Act 1952, Environmental (Protection) Act, 1986 and Forest (Conservation) Act, 1980

The resolution ostensibly speaks of mineral development but is actually intended to help companies meet their raw material requirement. This is clear from a reading of the resolution. It clearly mentions that the state has signed more than 50 MoUs for establishment of steel plants and alumina refineries which are grappling with issues pertaining to availability of raw materials. “Hence there is a need to authorise second and subsequent mine leases,” the resolution states.

Primarily these renewals are under the domain of the Indian Bureau of Mines. As per the Mineral Concession Rules of 1960, second and subsequent renewal of mines are permitted by the state only after receiving due comments from IBM. IBM comments whether the project qualifies as a mineral development project or not. Generally, IBM replies back on its stand within three months of the submission of application by a state. In case IBM does not reply, the state deems it as a sign of no objection and issues the subsequent renewal order.  

But the latest order might encroach on IBM's territory. An official with the Ministry of Mines, on condition of anonymity said:”the resolution is illegal as it cannot be executed without the approval of Ministry of Mines. This is IBM 's domain, maybe the state government is trying to keep discretionary power of allocation/renewal to themselves.”

Rajesh Verma, principal secretary in charge of the steel and mines department of Odisha was not available for comments. His office staff , however, responded, saying, “We are not sure of  the allocation process in future, but at present no mine lease renewals have been issued.”


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