For Investors
FOREIGN INVESTMENT IN INDIAN MINERAL SECTOR:

Mineral wealth is finite and non-renewable. It has major resources for development. The management of this precious resource and its optimal and economic use are matters of national importance. Management of mineral resources is the responsibility of the Central Government and over all mineral policy is determine by the Central Government. The Mines and Minerals (Development Regulation ) Act, 1957 lays down the legal frame work for the regulation of the mines & development of all minerals other than petroleum and natural gas. The Central Govt. have framed the Mineral Concession Rules 1960 for regulating grant of reconnaissance permit for aerial survey, prospecting licences and mining leases in respect of all minerals other than atomic mineral and minor minerals. The State Government grants the reconnaissance permit, prospecting licences and mining leases. In case of major minerals listed in Schedule-I appended with the MMDR Act, the mineral concessions are granted by the State Governments only after the prior approval of the Central Government.

Following the economic liberalisation initiated by the Central Govt. in 1991, the reserved sectors like Power Generation, Mining and Metallurgical Industries were opened for private investment, both foreign and domestic. The Central Government thought to frame new policy to place the mining sector at par with other countries. This would enable to regulatory and fiscal frame work of the mining sector in India to meet international standards and competitiveness. With the basic structural reforms, the National Mineral Policy (NMP) was announced in March 1993 and 13 minerals like Iron Ore, Manganese Ore, Chrom Ore, Sulphur, Gold, Diamond, Copper, Lead, Zinc, Nickle, etc. which were reserved exclusively for public sector exploitation, were thrown open for exploitation by private sector. This entire mining sector is now open for private investment including foreign direct investment. The objectives of NMP are to streamline existing legislation, simplify procedure ease restriction, decentralise power, attract foreign investment etc. This National Policy also stipulates induction of foreign technology and foreign participation in exploration and mining for high value and scarce minerals.

In 1994, the earlier restriction of 40%on foreign equity was removed. Even 100% foreign equity is now permitted. The only requirement is that the company should be registered in India under our corporate laws.

  • In January, 1997 an "automatic route" for foreign equity participation upto 50% was introduced for companies mining certain minerals like Iron-ore, manganese ore, chromite, bauxite, copper ore, lead, zinc etc. whereby the investors have to only go through the Reserve Bank of India, and not to seek any Government approvals. This facility is not available in the case of gold, silver, diamonds and precious stones.
  • For gold, silver, diamond etc., approval of Foreign Investment Promotion Board (FIPB) is required, based on parameters like size, funds, track record, technology, financial stability and equity of Indian partner in JV etc.
  • Higher equity participation upto 74% is allowed through the "automatic route" in services related to mining such as drilling, shafting etc.
  • 74% foreign equity through automatic route also allowed in base metals and alloy industries.
  • Beyond 50/74% and upto 100% equity, is also allowed subject to FIPB clearance.
 
AERIAL PROSPECTING:
In case of aerial prospecting/survey/reconnaissance, which do not include pitting, trenching or sub-surface excavation involving disturbance to earth and also for conducting test, drilling over the anomalous areas for identification of the minerals with a grid not exceeding five bore hole per 100 Sq. kms., no prior site clearance including public hearing is required under the EIA notification. Site clearance, however, has to be obtained before undertaking detailed prospecting and exploration work on the ground. In this respect, the normal procedure for obtaining site clearance/environment clearance including public hearing will be needed.
 
PROCESS OF SANCTION:
  • At the time of process of the application for prospecting licence and ining leases following points are generally examined by the Department in each and every case in accordance with the prevailing Acts & Rules.
  • Applied area is if in Charagah (grass), land, consent for mining activities in said area, from the competent Revenue Authority will be essential before issuing of grant.
  • A letter showing clear status of the applied land is required from the Forest Department confirming that the area does not fall inside in any forestland.
  • The applicant has to obtain Site clearance from Ministry of Environment & Forest, Government of India, New Delhi, on recommendation made by State Pollution Control Board after necessary public hearing, if subjected applied area for PL is 500 hectares or above.
  • Under environment Protection Act & Rules made thereunder, Environment clearance is also required for prospecting and mining operations of major minerals. Such application, to get Environment Clearance, shall be accompanied by Environment Impact Assessment Report and the Environment Management Plan.
  • However in case of minor mineral lease and small mining leases upto 5 hectares of major mineral no environment clearance is required.
  • Before site clearance (S.C.)/environment clearance (E.C.) is issued, public hearing by State Pollution Control Board has been made essential part as per Environment Impact Assessment (EIA) Notification issued on10.07.1997.
  • Approved Mining Plan prepared by the recognized person.

For more information contact on admhq@dmg-raj.org