Indian Mining Sector and Regulations

India has a cultural history of contributing significantly to its economy through mining. With around 80 per cent of the country getting produced by state-owned enterprises and the rest by private companies, legislation was required to control and detect fraud or random scams in the mining industry. Therefore, the Central Government, 1952 and 1957, promulgated the Mines and Mineral ( Development and Regulation ) Act and the Mines Act.

The primary objective of the Act is to provide workers with safety in mines and to amend and regulate the development of workers and their employees. Mining underground can be extremely difficult based on the massive infrastructure required. In addition to infrastructure, local geologies and features of rock mechanics will set the right course for mining, thus contributing to construction and development costs.

What are mineral resources?

According to increasing geological confidence, mineral sources have subdivisions—indicated, inferred, and measurement categories.  The Demonstrated Mining Source has a higher level of confidence than the Inferred Mineral Source but has a lower level of confidence than the Measured Mineral Source.

A Mineral Resource is the occurrence or concentration of solid objects of economic interest or on the surface of the Earth in the form, quality, or quality and quantity that is the reasonable possibility of ultimate economic output. Geographical evidence is based on detailed and reliable testing and sampling and is sufficient to ensure grade or quality and geological continuity between observational points.

Mining in India

How is the mining industry regulated?

Regulatory framework

The mining industry gets regulated at both the state and provincial levels. Under the Constitution of India, the states have the power to regulate mining and mineral development. However, these powers are subject to organisational rules and regulations regarding mining.

Classification of Minerals

Minerals are divided into two types -minor and major. State governments have the power to formulate and regulate the exploration, processing and extraction of all minor minerals such as building blocks, clay and sand.

All minerals (except minor minerals) are automatically classified as major minerals. The federal government has the power to reform, refix its royalty, issue regulations, etc., about major minerals. Since iron ore gets highly classified as a major mineral, we focus on legislation at the federal level and major minerals in this chapter.

The federal government owns overall coastal minerals (i.e., minerals extracted from the sea or ocean floor in Indian seas such as territorial waters, continental shelves and special economic zones). The federal government has the right to allocate concessions and to collect monetary royalty for coastal mining.

Mine Construction

The mining method should be taken into consideration when thinking about construction costs. Mining can get classified as a surface mine (open pit) or underground mine. Underground mines present unique challenges to project developers compared to open-pit mining operations, and Open-pit mining is more expensive, safer, and less complicated.

Miners do not have to protect themselves from air loss or to a cave from the top of an open pit. Operators usually use larger equipment in their fleet for open-pit operations.

The cost of building an underground mine is naturally greater than open-pit mines. Another crucial infrastructure to consider – is ore and personnel transport, ventilation, electricity, and water. These extra considerations need to be kept in mind for underground operations.

Which regions are most active?

India’s mineral wealth gets concentrated in Odisha, Andhra Pradesh, Rajasthan, Chhattisgarh, Jharkhand, Madhya Pradesh and Karnataka. Iron ore deposits are found mainly in Odisha, Jharkhand, Chhattisgarh, Maharashtra, Goa and Karnataka.

Major manganese reserve areas are Maharashtra, Madhya Pradesh, Odisha, Andhra Pradesh and Karnataka. Copper reserves are found in Rajasthan, Madhya Pradesh and Jharkhand. Zinc reserve areas are found mainly in Rajasthan, Andhra Pradesh, Madhya Pradesh, Bihar and Maharashtra. Chromite ore extracts are found in Odisha, Manipur, Nagaland, Karnataka, Jharkhand, Maharashtra, Tamil Nadu and Andhra Pradesh.

What are targeted minerals?

India produces about 88 minerals, including petroleum, atomic, metal and non-metallic minerals. India is a leading producer of iron ore minerals such as chromite, iron ore, zinc, bauxite, manganese, aluminium and copper. India has set a goal of completely switching to electric vehicles by 2030. To achieve this goal, it needs to invest in the domestic production of lithium-ion batteries (currently the most expensive part of an electric car).

NITI Aayog ( thinktank for the Indian government) has found that India does not have enough reserves for the most crucial lithium-ion components like lithium, cobalt and nickel. India will need to build international relations and cooperation to protect access to essential minerals for building its domestic level battery manufacturing industry.

What is the normal duration of mining rights?

In 2015, the mining lease term was increased to 50 years; in the end, the lease will not be renewed and resold. A reconnaissance permit or prospecting license may be granted for three years and extended for more than five years. A state or federal government may terminate a lease or license prematurely for the following reasons:

  • mining management and mineral development;
  • the conservation of natural resources;
  • flood control;
  • pollution prevention;
  • to reduce the threat to public health or communication;
  • Maintain the safety of monuments, buildings, and other structures;
  • mineral conservation; and
  • to maintain mine safety.

No such advance termination order is made without giving the licensee or leaseholder a reasonable opportunity to be heard. The mining contract expires if the company fails to start mining within two years from the date of the lease agreement or ceases to mine for two years unless the state government is satisfied with the reasons for the delay.

Phases of the Mineral Development Plan

  • Compared to other resource industries, the first factor to consider is the availability of land resources. It is a crucial start as such mineral resources are hidden, concealed, and buried underground. The hardest part of this phase is finding the deposit worth mining.
  • Mine exploration is the second and the next phase in a process that takes about 8-10 years. It is now clear that getting a new deposit to mine is not a quick or easy task, and it takes more than just a spade, a gold pan, and a hole.
  • There are various groups of talented and professional people hired for the success of any mine. Popular exploration job titles often employ geologists, inspectors, pilots, drummers, invaders, equipment operators, machine inspectors, mechanics, and camp cooks – all of them being essential ingredients in obtaining effective mineral deposits.
  • The third phase is environmental testing, and accreditation is the continuous sounding of stakeholders. The most complex aspect of this process is that it can take years to complete and includes exploring and allowing the environment.
  • The construction phase is the fourth step in the process and lasts about 1-3 years. Establishing possible courses and obtaining permits and licenses allows for the actual construction of the work to begin. After excavation and exploration, many goods and services are brought to take the mining project into production. Such assets include suppliers of transportation, utilities, building materials, equipment, and much more.
  • Operation is the next in the Mineral Resources Development Cycle. Surface mining methods are used to extract minerals near the Earth’s surface and are called extraction. In extraction, heavy objects such as drills, shovels, pull cords, and trucks are used efficiently to make the operation more efficient and economical.

Excavation methods extract the various minerals buried deep and required highly skilled equipment to transport the miners and materials so that work and activities within the mine can continue in the restricted area. There are steps to convert raw, broken metal into usable material or separate minerals that are not precious in the waste rocks.

Conclusion

The Mines Act of 1957 was enacted to address employment opportunities in the mining sector and the safety and advancement of mining-related workers. This action restricts the unnecessary or used labour vessels among the poorest sections of society and provides a desirable platform for hearing in the event of injustice. Therefore, legislation of this kind is perfect for growing the world economy and transforming people who are easily accessible.

This Act does not apply to any mining or excavation for exploration purposes and not for extracting. In the language of layman, the purpose of mining is crucial to clarify any activity under this Act. Also, minerals must be extracted for commercial use or sale of it.

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