India’s mining sector faces challenges, with only 50 out of 385 mines auctioned since 2015 operating. Despite major reforms in the Mines and Minerals (Development and Regulation) Act, 1957, the government has not implemented these changes. The minister of mines and coal, G Kishan Reddy.
stated that the government is working to increase domestic mining’s share in total mineral consumption and achieve self-reliance in the mining sector. The International Energy Agency’s report indicates that major global mining projects take an average of 16.5 years from discovery to production.
The mining and quarrying sector in India contributes to 2% of the country’s GDP, with its value increasing from Rs 2,90,411 crore in 2014-15 to Rs 3,18,302 crore in 2022-23. The government has said that amendments made in the MMDR Act have led to speedy auction and production from mines.
which have been instrumental in augmenting the production of key minerals. For example, the production of iron-ore has increased from 129 million tonnes in 2014-15 to 258 million tonnes in 2022-23, and the production of limestone has increased from 295 million tonnes in 2014-15 to 406 million tonnes in 2022-23.
The MMDR Act, 1957 was amended with effect from March 28, 2021, with the objective of increasing mineral production, time-bound operationalisation of mines, increasing employment and investment in the mining sector, and increasing the pace of exploration and auction of mineral resources.
Key amendments include removing end-use restrictions for auction of mines, allowing captive mines to sell up to 50% of minerals produced during the year after meeting the requirement of linked plant, and removing restrictions on transfer of mineral concessions. The MMDR Amendment Act, 2023, was further amended.
The objective of increasing exploration and production of critical and deep-seated minerals, which are essential for the advancement of several sectors, including high-tech electronics, telecommunications, transport, and defense. Withdrawing funds for the initiative to be taken up by oil refiners, who have lost their power to price fuels for the last few years, is a cause for concern.
Since the introduction of the auction-based mineral allocation system in 2015, India has auctioned 385 mines across various states. However, only about 50 mines have become operational, highlighting major challenges in the mining sector. The slow pace of mine activation has raised concerns about investment bottlenecks, bureaucratic hurdles, and regulatory inefficiencies.
Key Challenges Hindering Mining Operations
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- Obtaining environmental, forest, and land acquisition clearances is a time-consuming process, often delaying mine operations by several years. Overlapping regulations from central and state authorities add further complexity. Many auctioned mines lack proper road, rail, and port connectivity, making mineral transportation inefficient and costly.
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- Power and water supply constraints also hinder operations, particularly in remote areas. High upfront costs, coupled with fluctuating global commodity prices, make mining a risky investment. Delays in mine activation increase holding costs, discouraging investors from participating in future auctions. Acquiring land for mining projects often faces.
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- Rehabilitation and resettlement issues further slow down project execution. Frequent policy changes, including higher taxes, retrospective dues, and royalty revisions, create uncertainty for mining companies. Regulatory challenges impact long-term planning and discourage private sector participation.
To accelerate mine operations, the government must streamline approval processes, improve infrastructure, ensure policy stability, and foster better engagement with local communities. Faster operationalization of auctioned mines is crucial to boosting domestic mineral production, reducing imports, and strengthening.
Group Media Publication
Construction, Infrastructure and Mining
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