UPSC MAINS 2019: National Mineral Policy, 2019 approved by Cabinet

National Mineral Policy 2019 approved by Cabinet

 

Topic: National Mineral Policy, 2019 approved by Cabinet

 

National Mineral Policy 2019 approved by Cabinet

Context:

The Union Cabinet, chaired by the Prime Minister Narendra Modi has approved National Mineral Policy 2019.

 

Background:

  • National Mineral Policy 2019 replaces the extant National Mineral Policy 2008 (“NMP 2008”) which was announced in year 2008.
  • The impetus to review NMP 2008 came about by way of a direction from the Supreme Court vide its judgment.
  • In compliance of the directions of the apex Court, the Ministry of Mines constituted a committee
  • The Committee also invited concerned NGOs and Institutional Bodies to take part in the deliberation of the Committee meetings.
  • The Comments/suggestions from the stakeholders were also sought. Based on the deliberations held at Committee meetings and stakeholders’ comments/ suggestions, Committee Report was prepared and submitted to the Ministry of Mines.
  • The Ministry of Mines accepted the committee Report and invited the comments/ suggestions of the stakeholders as part of the PLCP process.
  • Based on the received comments/ suggestions received in PLCP process and the comments/ suggestions from the Central Ministries/ Departments the Ministry of Mines finalized the National Mineral Policy 2019.

 

The National Mineral Policy, 2008:

The National Mineral Policy, 2008, seeks to address areas of serious concern in mining sector relating inter-alia to:

  • making the regulatory mechanism more conducive to technology and investment flows by ensuring greater transparency in allocation of mineral concessions, seamlessness and security of tenure in the concession processes,
  • strengthening the role of Geological Survey of India, Indian Bureau of Mines, and State Directorates of Mining and Geology,
  • developing and enforcing a Sustainable Development Framework ensuring stakeholder rights to the indigenous population and that the mining activity takes place along with suitable measures for restoration of the ecological balance,
  • discourage and prevent sub-optimal and unscientific mining by promoting zero-waste mining,
  • developing new concession instruments to attract high technology for incentivizing exploration of large areas, and
  • developing a cluster approach to mining of small deposits in a scientific and efficient manner.

 

The National Mineral Policy 2019:

The National Mineral Policy 2019 includes provisions which will give boost to mining sector such as

  • introduction of Right of First Refusal for RP/PL holders,
  • encouraging the private sector to take up exploration,
  • auctioning in virgin areas for composite RP cum PL cum ML on revenue share basis,
  • encouragement of merger and acquisition of mining entities and
  • Transfer of mining leases and creation of dedicated mineral corridors to boost private sector mining areas.
  • The 2019 Policy proposes to grant status of industry to mining activity to boost financing of mining for private sector and for acquisitions of mineral assets in other countries by private sector
  • It also mentions that Long term import export policy for mineral will help private sector in better planning and stability in business
  • The Policy also mentions rationalize reserved areas given to PSUs which have not been used and to put these areas to auction, which will give more opportunity to private sector for participation
  • The Policy also mentions to make efforts to harmonize taxes, levies & royalty with world benchmarks to help private sector.

 

Benefits:

  • The New National Mineral Policy will ensure more effective regulation.
  • It will lead to sustainable mining sector development in future while addressing the issues of project affected persons especially those residing in tribal areas

 

Objective:-

The aim of National Mineral Policy 2019 is to have a more effective, meaningful and implementable policy that brings in further transparency, better regulation and enforcement, balanced social and economic growth as well as sustainable mining practices.

 

Mineral Resources:

  • On the basis of chemical and physical properties, minerals are grouped as −
    • Metallic minerals and
    • Non-metallic minerals.
  • Major examples of metallic minerals are iron ore, copper, gold, etc.
  • Metallic minerals are further sub-divided as ferrous and non-ferrousmetallic minerals.
  • The minerals containing iron is known as ferrous and without iron is known as non-ferrous (copper, bauxite, etc.).
  • Depending upon the origination, non-metallic minerals are either organic (such as fossil fuels also known as mineral fuels, which are derived from the buried animal and plant, e.g. such as coal and petroleum), or inorganicminerals, such as mica, limestone, graphite, etc.

 

Distribution of Minerals:

  • Minerals are unevenly distributed on the earth’s surface.
  • All minerals are exhaustible in nature, i.e., will exhaust after a certain time.
  • However, these minerals take long time to form, but they cannot be replenished immediately at the time of need.
  • More than 97% of coal reserves occur in the valleys of Damodar, Sone, Mahanadi, and Godavari rivers.
  • Petroleum reserves in India are located in the sedimentary basins of Assam, Gujarat, and Mumbai High (i.e. off-shore region in the Arabian Sea – shown in the map given below).
  • Some new petroleum reserves are also found in the Krishna-Godavari and Kaveri basins (shown in the image given above).

 

Hydrocarbon Exploration and Licensing Policy (HELP):

  • Central Government had launched Hydrocarbon Exploration and Licensing Policy (HELP) in March 2016, as a new policy regime for Exploration & Production (E&P) in petroleum and natural gas sector.
  • Its main features are Revenue Sharing Contract (RCS), single Licence for exploration and production of conventional as well as unconventional hydrocarbon resources, marketing and pricing freedom etc.
  • Open Acreage Licensing Policy (OALP) is also main innovative feature under HELP wherein investor can carve out blocks of their own interest and submit an expression of interest (Eol) throughout year.
  • Based on areas for which EoI has been expressed bidding is conducted every 6 months.

 

Objectives of HELP

The major Guiding Principles behind HELP are to:

  • enhance domestic oil and gas production
  • bring substantial investment
  • generate sizable employment
  • enhance transparency and
  • reduce administrative discretion

 

Key Features of HELP:

  • A Single License: A single license for exploration and production of all forms of hydrocarbons in blocks to firms offering the maximum revenue to the government would be given.
  • Open acreage policy: Blocks would be allocated under the ‘open acreage policy’, wherein companies can submit bids for areas of their choice.under open acreage policy companies can choose blocks from the designated area round the year without waiting for roadshows and auctions like in NELP.
  • Revenue Sharing model: production-sharing contract between government and contractors would henceforth be governed by a revenue-sharing model instead of a profit-sharing one
  • It provides for a common license for all hydrocarbons, including shale gas and coal bed methane, and does away with computing complex investment multiples and scrutinizing cost recoveries
  • It also provides marketing and pricing freedom for the crude oil and natural gas produced.
  • On the lines of NELP, cess and import duty will not be applicable on blocks awarded under the new policy.

 

The New Exploration Licensing Policy (NELP):

Under NELP, which became effective in February 1999 (with the first production sharing contract (PSC) getting signed in 2000), acreages are offered to the participating companies through a process of open international competitive bidding, in a transparent manner with attractive terms & conditions. The first round of offer of blocks was launched in 1999 and most of the ninth round awards were concluded in 2012.

 

The salient features of NELP are as under:

  • 100% FDI is allowed under NELP
  • No mandatory state participation through ONGC/OIL or any carried interest of the Government.
  • Blocks to be awarded through open international competitive bidding
  • ONGC and OIL to compete for obtaining the petroleum exploration licenses (PEL) on a competitive basis instead of the existing system of granting them PELs on nomination basis.
  • ONGC and OIL to get the same fiscal and contract terms as private companies.
  • Freedom to the contractors for marketing of crude oil and gas in the domestic market.
  • Royalty at the rate of 12.5% for the onland areas and 10% for offshore areas.
  • Royalty to be charged at half the prevailing rate for deep water areas beyond 400 m bathymetry for the first 7 years after commencement of commercial production.
  • Cess to be exempted for production from blocks offered under NELP.
  • Companies to be exempted from payments of import duty on goods imported for petroleum operations.
  • No signature, discovery or production bonuses.
  • Agreement between government and contractor is governed by a Production Sharing Contract. A Model Production Sharing Contract is created which is reviewed for every NELP round.
  • Contracts to be governed in accordance with applicable Indian Laws.

 

Sample Question:

Critically evaluate the National Mineral Policy, 2019?


National Mineral Policy 2019 - Info graphics - Mar6th