KOLKATA (miningweekly.com) – Responding to the Indian government’s invitation for comment on the draft National Mineral Policy (NMP), mining companies have indicated they want compensation for delays in the granting of mandatory government approvals.
Seeking a time-bound grant of the approvals, industry has said that a mining leaseholder should be compensated for delays “beyond reasonable causes”.
Industry has pointed out that approval delays are widespread in the mining sector and that it was the biggest cause of time and cost overruns in projects. Delays are also the biggest impediment to achieving the governments stated objective of doubling the mining industry’s contribution to gross domestic product to 4%.
One of the industry’s suggestions is in-principle approval of forest and environment clearances, for instance. These could be ratified by an audit on the completion of the project.
Another issue flagged is the transferability of composite exploration and mining licences granted to a successful bidder. The industry wants a mining rights holder to complete freedom to transfer the mining right to another miner and to recover the cost of exploration from such transfer, while the government could have the option of levying a fee for the transfer of the right.
Delays in granting of approvals have been the hallmark of the Indian mining sector, although there are no comprehensive data available to quantify how many to projects have been affected.
The country’s largest mining entity, Coal India, has more than 89 projects that have missed their completion date, 62 of which are mining projects. Most of these projects are victims of delays in securing mandatory government approvals and law and order issues at project sites.
Meanwhile, the adoption of the auction route to allocate mineral assets has also come up for criticism. The Federation of India Mineral Industries, the representative body for mining companies, has stated its opposition to auctions for allocated resources on the grounds that it is not in practice in any other country and resulted in higher costs for the industry.
Another business body, ASSOCHAM in its commentary on the draft NMP said that end-use industries should be directly granted mining lease for minerals consumed by it while auctions should be adopted only in case of merchant miners.