MINING SECTOR

WHY IN NEWS:

• The Union cabinet in January 2021 approved a raft of mineral sector reforms, including doing away with the distinction between the captive and non-captive mines, reallocation of non-producing blocks of state-owned firms, and amending some sections of the Mines and Minerals (Development and Regulation) (MMDR) Act to help auction more mines.

BACKGROUND:

• The mining lease area out of the total geographical area of India is around 0.14%. And out of which only 20% is mined.
• The Indian sub-soils are rich in onshore and offshore crude oil and gas, coal, iron ore, copper, bauxite, etc.
• India has large reserves of iron ore, bauxite, chromium, manganese ore, baryte, rare earth and mineral salts.
• India produces as many as 95 minerals, which includes 4 fuel, 10 metallic, 23 non-metallic, 3 atomic and 55 minor minerals
• In 2015-16, there were more than 2,101 reported mines excluding the atomic and minor minerals, natural gas and petroleum.
• India incurs an import bill of ?2.5 trillion annually due to mineral imports.

SIGNIFICANCE OF MINING SECTOR:

• GDP contribution:
  • The mining sector’s contribution to the GDP is 2.3-2.5 % at present.
  • Mineral production in India grew at a compound annual growth rate (CAGR) of 5.72% between 2013-14 and 2017-18.
• Growing demand:
  • The demand for minerals will grow four-five times over the next 12-15 years against a backdrop of globally decreasing resources.
  • There would be a huge demand for the metals in view of rapid urbanisation and growth in the manufacturing sector.
  • India’s target of increasing manufacturing sector’s share in GDP largely depends on mining sector.
• Reduce import bill:
  • Growth in mining sector can cut down the import costs as the country imports ?2.5 trillion worth of minerals annually
• Employment generation:
  • It is a labour-intensive sector and provides employment for both unskilled labour and skilled labour. Being a part of the primary sector, it largely provides unskilled jobs.
  • Indian mining industry provides job opportunities to around 7 lakh individuals
• Forward and backward linkages:
  • The Development of the mining-based industry also gives a boost to the associated industries and leads to the overall development of the region.

GEOGRAPHICAL DISTRIBUTION OF MINES:

INITIATIVES TAKEN:

• Legal framework:
  • The entry 23 of State list mandates the state government to own the minerals located within their boundaries,
  • The entry 54 of Union list mandates the central government to own the minerals within the exclusive economic zone of India (EEZ).
  • The Mines and Minerals (Development and Regulation)  Amendment Act of 2015
    • Introduces Mineral Concessions Grant through auctions to bring transparency and remove discretion
    • The District Mineral Foundation (DMF) to address the longtime grievance of the people affected by mining
    • National Mineral Exploration Trust (NMET) for incentivising regional and detailed exploration to fill the gaps in exploration in the country
    • Stringent measures to check illegal mining.
• International cooperation:
  • International Seabed Authority (ISA) regulates mineral exploration and extraction.
  • It is guided by the UN treaty and India being a party to the treaty has received an exclusive right to explore polymetallic nodules over 75000 sq. km in Central Indian Ocean Basin.
• National Mineral Policy:
  • Encouraging the private sector to take up exploration, on a revenue sharing model.
  • Provision of merger and acquisition of the mining entities and transfer of mining leases and creation of dedicated mineral corridors, and use of coastal waterways and inland shipping for evacuation and transportation of minerals to boost private sector mining areas.
  • It also mentions long term import-export policy for mineral, which will help the private sector in planning and bring stability in business.
  • The policy also makes efforts to harmonise taxes, levies, and royalty with the world benchmarks to help the private sector.
  • Provisions for e-governance, IT-enabled systems, awareness and information campaigns have been incorporated for regulations.
  • The utilisation of the District Mineral Fund for the equitable development of project affected persons and areas.
  • It also introduces the concept of intergenerational equity that deals with the well-being not only of the present generation and also of the generations to come.
  • It also proposes to constitute an inter-ministerial body to institutionalise the mechanism for ensuring sustainable development in mining.
• National Mineral Exploration Policy (NMEP).
  • The NMEP primarily aims at accelerating the exploration activity in the country through enhanced participation of the private sector.
• Sustainable mining:
  • Inter-ministerial body to institutionalise the mechanism for ensuring sustainable development in mining.
  • Star rating of mining leases to establish a sustainable development framework for the Indian mining sector.
• Curbing illegal mining:
  • An MoU was signed between the Indian Bureau of Mines (IBM) and the National Remote Sensing Centre (NRSC), ISRO in 2016 to undertake a pilot project on “monitoring of mining activities using satellite imagery” to deter illegal mining.
  • The Mining Surveillance System (MSS) is launched to check illegal mining through automatic remote sensing detection technology.
• Welfare measures:
  • District Mineral Foundation Fund (DMF) was established for the welfare of mining-affected people and areas under Pradhan Mantri Khanij Kshetra Kalyan Yojana [PMKKKY].
• Investment:
  • 100% FDI permitted via automatic route for mining and exploration of metal and non-metal ores.

CONCERNS:

• Low growth rate and job creation:
  • The Indian mining sector grew at a CAGR of 6 % in the last decade compared to 22% in China in the same period.
  • The mining sector in India employs a smaller percentage of India’s population, just about 0.3% as compared to 3.8% in South Africa, 1.4% in Chile and 0.7% in China.
• Displacement and rehabilitation issues:
  • Large scale displacement of local people leads to grievances and improper rehabilitation measures, thereby, leading to people’s alienation
  • It has given space to left-wing extremism in the resource-rich areas like Chhattisgarh, Jharkhand, Odisha, etc.
• Human rights violations
  • Human rights violation has taken place in forms of mine-related deaths, inadequate rehabilitation, and developmental steps, etc.
  • Massive local protests have taken place against mining in Niyamgiri Hills of Odisha
• Safety of miners:
  • Mining also puts the lives of miners at risk due to the rudimentary ways adopted and the absence of adequate safety gear and protocols.
  • For instance, mine-related accidents at Ksan coal mine in Meghalaya
• Environmental and health issues:
  • Loss of biodiversity and local heritage due to mining activities.
  • Disease burden:
    • The prevalence of mining in an area causes various diseases like fibrosis, Pneumoconiosis, and silicosis in workers as well as locals.
  • Water Pollution
    • Water from streams and rivers in mining areas have become acidic and unfit for drinking.
    • Example: Meghalaya’s Kopili river, Damodar river etc.
  • Contaminated air with high particulate matters is also a major problem in mining rich regions.
• Administrative issues:
  • Delay in obtaining a mining lease
    • It takes minimum one-year time and this can get extended to even more than 5 years, as compared to with just 30 days in Canada and 60 days in Australia.
  • Arbitrary allocation of coal mines leads to the long litigation and eventually cancellation of allocations and charges of corruption in block allocations.
  • Delay in environmental clearances due to bureaucratic hindrances.
  • Judicial interventions lead to long delay and losses for investors.
  • For example: Banning of Vedanta group in Niyamgiri Hills of Odisha and shut down of 88 illegal mining leases in Goa in 2018.

WAY FORWARD:

• Transparent clearance regime:
  • There is a need for an expedition of the clearance process for the judicious utilisation of mineral resources.
• Stringent implementation of mining-related rules
  • Stringent implementation of mining-related rules is needed especially regarding the ban on rat-hole and unscientific mining to prevent mine-related accidents.
• Transparency in block allocations:
  • Ensure transparency in block allocations and rule-based order should be established.
• Use of technology:
  • Use of technology for a better way of mineral exploration and surveillance systems.
• Rehabilitation measures:
  • Proper rehabilitation of the displaced population, the tribal rights need to be respected in accordance with the law. Follow Virginius Xaxa committee recommendations of restoration of alienated mining land to the tribal owners
• Utilisation of District Mineral Fund:
  • Utilisation of DMF to construct physical & social infrastructure and efforts should be made for the integration of the local population in the process.
• Adoption of proper regulatory framework:
  • Proper implementation of the NGT guidelines for the protection of forest
  • Proper environmental impact assessment (EIA) and social impact assessment (SIA) must be conducted before allocating the projects.
  • Adopting global practices in operations and ensuring safe working conditions for workers in the mining sector

PRACTICE QUESTION:

Q. Success of ‘Make in India’ initiative requires a holistic development of the mineral sector on a sustainable basis. Comment