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Indian government debates solutions to mining lease transferability concerns

28th September 2015

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) – Differences of opinion have surfaced within the Indian government over the issue of mining lease transferability.

The Mines and Minerals Development and Regulation Act (MMDRA), promulgated in January, did not allow for the transfer of a mining lease from one company to another unless the lease was granted through a mineral auction.

This effectively prevented mergers and acquisitions in the mining and mineral sector, as companies would not be allowed to transfer their old mining leases to a buyer or merged entity.

The issue of the nontransferability of mining leases had been brought to the forefront after Lafarge India sold two cement units to Birla Corp Limited but was prevented from transferring the limestone mining lease to Birla.

The Mines Ministry had committed to resolving the issue, but a ministry official has indicated that there were differences of opinion about how to proceed.

The government had ruled out making any amendments to the MMDRA. However, while the Mines Ministry favoured enabling the transfer of mining leases through a government executive order, government’s legal department maintained that such an executive order would result in legal challenges to the MMDRA.

The official said that amending the MMRDA was the only viable option, but moving the legislation through Parliament would be protracted, considering the fractured nature of Indian politics and would expose government to criticism of not having thought through the new legislation.

A section of the ministry said it was widely acknowledged within the government that the logjam over lease transferability would seriously jeopardise the much-needed consolidation of the fragmented Indian mining industry.

Government’s efforts to woo global mining majors and introduce modern technology would also be negatively impacted should the nontransferability clause remain in place.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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