New Mines Bill approved by Cabinet: Dinsha Patel


NEW DELHI: A new Mines Bill that provides for sharing of profits and royalty with project-affected people has been cleared by Cabinet, mines minister Dinsha Patel said.

The Bill is likely to be tabled in Parliament in the Winter Session.

“The Union Cabinet today approved the Mines and Mineral Development and Regulation (MMDR) Bill, 2011, which has provisions for 26% profit-sharing by coal miners and an amount equivalent to royalty by others with project- affected people,” Patel said.

The Bill was earlier supposed to be tabled during the Monsoon Session, as a ministerial panel headed by finance minister Pranab Mukherjee had approved it in July.

As per the provisions of the Bill, coal mining companies will have to share 26 per cent of the profits from their mines with people impacted by projects.

In the case of non-coal miners, the new law will provide for payment of an amount equivalent to royalty paid to the state government to project-affected persons.

The new MMDR Bill, 2011 seeks to replace a more than half-a-century-old law under the same name.

As per the Bill, a Mineral Development Fund will be created in every district, in which profit and royalty shared by miners will be deposited and spent on the local population and area development, mines secretary S Vijay Kumar said.

Apart from compensating project-affected people through profit-sharing and royalty, the new Bill also obligates mining firms to pay a 10% cess to state governments and 2.5% to the Centre on the total royalty paid.

The mines secretary added that the Bill also has punitive provisions to prevent illegal mining.

The new MMDR Bill, 2011, aims to introduce better legislative environment for attracting investment and technology into the mining sector by the following:

1. States may call for applications in notified areas of known mineralization for prospecting based on technical knowledge, value addition, end-use proposed ore -linkage etc. and to invite financial bid;

2. States may grant of direct mining concessions through bidding based on a prospecting report and feasibility study in notified areas where data of minerals is adequate for the purpose;

3. State Government may set up a minimum floor price for competitive bidding;

4. Special provisions for allowing mining of small deposits in cluster, where cooperatives can apply;

5. National Mining Regulatory Authority for major minerals – State Governments may set up similar Authority at State level for minor minerals;

6. Imposition of a Central cess and a State cess, and setting up of Mineral Funds at National and State Level for capacity creation;

7. For the purpose of sharing the benefits of mining with persons or families having occupation, usufruct or traditional rights in mining areas, and for local area infrastructure, creation an amount equal to royalty in case of mineral other than coal, and 26% of net profits, in the case of coal, has been proposed to be credited each year to district Level Mineral Foundation;

8. Sustainable and scientific mining through provision for a Sustainable Development Framework;

9. Consultation with local community before notifying an area for grant of concession, and for approval of Mine Closure Plans;

10. Enhanced penalties for violation of provisions of the Act, including debarment of person convicted of illegal mining for future grants and termination of all mineral concessions held by such person; and

11. Establishment of Special Courts at the State level for speedier disposal of the cases of illegal mining.

The new draft MMDR Act would have financial implications in the creation of an independent National Mining Tribunal and National Mining Regulatory Authority at the Central Level, and the expenditure involved in the capacity building of the Indian Bureau of Mines. The funds for this expenditure are likely to be met from levy of cess at the rate of 2.5% on the basis of Customs/Excise Duty.

The new MMDR Act would be implemented immediately after receiving Parliamentary approval and President`s assent, and a date of commencement would be notified separately.

The approval will help in developing the country`s mining sector to its full potential so as to put the nation`s mineral resources to best use for national economic growth, and ensure raw materials security in the long term national interest.


The Government constituted a High Level Committee (HLC) in 2006, which suggested for evolving a mining code adapted to the best international practices, streamlining and simplifying procedures for grant of mineral concessions to reduce delays, etc. Based on the HLC recommendations, the Government had announced National Mineral Policy (NMP) on 13.3.2008.

To give effect to the policy directions in NMP, the Government has now evolved a new Mines and Minerals (Development and Regulation) Bill, 2011, after several rounds of consultations with the stakeholders including State Governments, concerned Ministries and Departments of Central Government, Industry and Civil Society. The MMDR Bill, 2011 was referred to a Group of Ministers (GoM) on 14.6.2010 and which has now, after five rounds of discussion, had recommended the draft Bill to the Cabinet. The GoM in its meeting held on 7th July, 2011 has recommended the draft MMDR Bill, 2011 for introduction in Parliament.


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