Highlights of the Bill


  • The Bill requires every person to obtain a license or lease for carrying on mining or related activities.
  • A new concession instrument called a High Technology Reconnaissance-cum-Exploration License has been introduced.
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  • The Bill provides for two methods of granting a mineral concession – competitive bidding where mineralisation is established and first-come-first-serve otherwise.
  • A District Mineral Fund (DMF) will be established in each district where there are mining operations to make payments to affected persons.
  • A mining leaseholder will pay an annual amount to the DMF for the benefit of affected persons.  This will be equal to 26 per cent of profits in case of coal, and royalty paid during the year for other minerals.
  • Mining leaseholders will be liable to provide annual compensation and at least one non-transferable share to persons affected by mining operations.

Key Issues and Analysis

  • The Bill permits allocation of mineral concession in tribal areas to a non-tribal.  There are two conflicting Supreme Court judgments on the legality of such a provision.
  • Royalty rates are set to achieve an optimum balance between attracting investments while maximising revenues for the state.  Mandating additional payments to the DMF could disturb this balance.
  • The Bill mandates the issue of a non transferable share to affected persons.  The Companies Act, 1956 does not permit the issuance of non-transferable shares.
  • Any gap in the minimum compensation to be paid to affected families by the DMF is to be covered by the state government. This could put pressure on state government finances.
  • The Bill does not clearly define some terms, such as ‘High Technology Reconnaissance-cum-Exploration License’.